Eight years down the line since the first digital currency – Bitcoin – was founded, central banks from every part of the world are increasingly issuing either positive or negative statement about crypto to their citizens. These guardians of the global economy have two issues concerning crypto that needs to be addressed. One, what to do about the emergence and growth of the digital currencies that are getting more and more attention as days pass by. Two, should the central banks issue official versions of the cryptos?
The following are so of the selected statements of central banks of different countries on how they are handling this issue.
The United States of America
The Federal Reserve bank’s investigation into the cryptocurrencies is in its early stages, but it has not been overly enthusiastic about the idea. According to Jerome Powell, a board member of the bank and also the nominated chairperson, early this year issued a statement saying that the technical issues remain with the technology and that the “governance and risk management will be critical.” He also added that there are “meaningful” challenges for a central bank digital currency. Furthermore, he said that the privacy issues could be a real problem and the private –sector alternatives can do the job well.
The government of China has made it crystal clear; the central bank has full control over the digital currency. The People’s Bank of China in 2014 selected a team of experts to a digital fiat money, and now they believe that the “conditions are ripe” for them to embrace the blockchain technology. However, the whip has cracked down on the private crypto issuers by banning the exchange and trading of bitcoin and other cryptocurrencies. Although they have not set the official date that they are going to introduce their crypto, the officials say that the digital currency could go a long way to help improve the overall payment efficiency and to allow more accurate control of the coins.
The governor of the bank of Japan Mr. Karuhiko Kuroda in his speech in October that the bank of Japan had no immediate plan to issue crypto. However, he added that they needed to deepen their knowledge about digital currencies. Mr. Kuroda said, “Issuing CBDC (central bank digital currency) to the general public is as if a central bank extends the access to its accounts to anyone,” … “As such, discussion about CBDC revisits fundamental issues of central banking.”
The Germany citizens prefer to pay for their services in cash; therefore, the Bundesbank has been worried about the emergence of bitcoin and its forms. Carl-Ludwig Thiele, a board member of the Bundesbank in his September speech said that digital currencies are “more of a speculative plaything than a form of payment.” He further explained that a shift of cash deposits into the blockchain technology was likely to interrupt the banks’ business model and hence it could upend the monetary policy. At the same time, the bank has been actively studying the application of the blockchain technology in the payment systems.
The governor of the bank of England, Mr. Mark Carney has been quoted saying that digital currencies are part of the “revolution” in finance. Just last year, the bank started a financial technology acceleration, same as the Silicon Valley practice so as to incubate many young companies. He added that the blockchain technology and the distributed accounting database, have “great promise” in helping central banks to increase and strengthen their security defense against the cyber-attacks and change the way through which payments are being transacted between consumers and financial institutions. However, he issued a warning that the BOE is still a long way from developing a digital version of the sterling pound.
The central bank of India is opposed to the digital currency due to the fact that crypto can be a channel through which terrorist financing and money laundering can be achieved. However, the reserve bank of India has a team of experts that are researching whether global central banks back the crypto can be used as a legal tender. However, presently, the use of crypto in India is a violation of the foreign-exchange rules.
The bank of Korea is focused on protecting their consumers and preventing the digital money from being used as a means of crime. The deputy governor of the bank Mr. Shin Ho-soon said this month that they had set a team of experts to research and monitor the way it is being used.