Central Banks Realize They Can’t Ignore Crypto, Digital Fiats Any More
Central banks and financial authorities in some of the world’s leading economies are increasingly turning their attention to cryptocurrencies and digital fiats.
Bloomberg reports that the American Federal Reserve is “dragging its feet” on digital fiat-related matters, with a “real-time” payment system “five to six years off.”
The news agency quotes Tobias Adrian, director of the International Monetary Fund (IMF)'s monetary and capital markets department, as stating,
“In the United States, and other countries around the world, it is just a matter of time before we see massive disruption. There is at least the potential that new technology might lead to a new global payment system fairly rapidly.”
Adrian also added that economists “like innovation and competition.”
Meanwhile, Coindesk reports that Federal Reserve Bank of Dallas President Rob Kaplan said, “We have not at the Fed decided to pursue or drive to develop a digital currency, but it’s something we’re actively looking at and debating.”
Kaplan also opined that “the dollar may not be the world’s reserve currency forever,” and admitted,
“People around the world are working really hard to try to find alternatives to dollars and dollar infrastructure because the more they’re invested in that, the more susceptible they are to sanctions, tariffs and what’s going on right now.”
As reported in August, the Federal Reserve is “seriously considering” to develop a new and faster payments system for domestic use in the U.S.
However, according to cryptocurrency author Mark Jeffrey, "This is like watching the taxi industry try to respond to Uber: the attempts are somewhere between comical and sad."
"The Federal Reserve has never been forced to innovate and compete: they have absolutely no idea how to do it," he recently told Cryptonews.com.
Meanwhile, outspoken crypto activist, Morgan Creek Digital co-founder Anthony Pompliano said in his newsletter on Wednesday that the “idea of the United States creating a digital dollar is gaining steam” among leading politicians and financiers in the country – with three congressmen and a number of ex-regulatory officials already lending their public support to the cause.
Their number includes J. Christopher Giancarlo, the former chairman of the United States regulatory Commodity Futures Trading Commission (CFTC), who co-wrote an op-ed article in the Wall Street Journal stating that if the USA succeeded in putting a man on the moon, it could also “send the dollar to cyberspace.”
The United States’ northern neighbor, Canada, is also mulling a digital fiat project. The Financial Post’s The Logic says it has obtained a copy of a Bank of Canada report that proposes introducing a digital Canadian dollar that would help the financial authority “combat the ‘direct threat’ of cryptocurrencies and collect more information on how people spend their money.”
Somewhat ominously, the bank says that one of the advantages of the digital fiat would be the fact that it could amass “personal details [that are] not shared with payees, but could be shared with [the] police or tax authorities.”
The bank says in the report that it needs to “innovate to stay in the game.”
And in Europe, the Banque de France (BdF)’s deputy governor Denis Beau has called on financial authorities everywhere to standardize their regulatory systems for cryptocurrencies. He also stated that a China-style ban on cryptocurrencies would be one possible alternative approach to standardization, as would “ignoring” Bitcoin and altcoins altogether.
In the release, Beau also states that “blockchain technology and more broadly Distributed Ledger Technology could help answer market’s needs and demands.”
And the same authority stated, “We shouldn’t refrain from experimenting with different forms of central bank-issued digital currency.”
However, in what was possibly a reference to Facebook’s Libra project, the BdF stated,
“Stablecoins of potential large size and reach may pose additional challenges of system-wide importance, to competition policy, financial and monetary stability.”