General Manager Of BIS Says Banks Should Not Issue Their Own CBDC

Agustin Carstens, the general manager of the Bank for International Settlements expressed his opinions about whether the banks should issue their own digital currencies. According to Agustin, the answer is ‘’no.’’ Why does he believe this is a bad idea we find out in the latest cryptocurrency news.

Carstens is known to be on the other side of crypto, having said multiple times that Bitcoin is a bubble and a Ponzi scheme. He also made statements how he believes Bitcoin is an ‘’environmental disaster’’ and at a speech, in Dublin, he explained that cryptocurrencies are extremely dangerous and could possibly undermine the entire global banking system.

He is now saying to the banks worldwide that there is a huge danger of issuing their own digital currency. Carstens believes that ‘’virtual coins’’ are everything banks don’t like. They are not financially stable and banks, therefore, choose policies that are designed to protect the customer not to expose him to more danger. During the speech Carstens pointed out:

‘’There are huge operational consequences for central banks in implementing monetary policy and implications for the stability of the financial system. Central banks do not put a brake on innovations just for the sake of it, but neither should they speed ahead disregarding all traffic conditions.
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’’

Banks and other financial institutions shouldn’t keep up with the technology of this kind because not every trend in the monetary space is good for the financial system and that they should be wary of hurting the functionality of the entire system. He keeps using the term ‘’financial panic’’ claiming that by issuing central bank-issued digital currency or CBDC, people would move out their money to commercial banks and this could lead to taking down the interest rates which could potentially harm the liquidity of the market.

The general manager didn’t get much support from other bank executives. Multiple banks have already chosen to issue their own digital currencies or at least have plans to do so. For example, the Bank of England revealed they are considering the issuance of a new digital currency that will work similarly to Bitcoin.

Also, IBM joined with Stellar and they introduced the Blockchain World Wire which is a project that guarantees banks the ability to issue their own stablecoins in the near future.