A fierce critic of the crypto industry now says crypto technology could help banks create an innovative and efficient monetary ecosystem.
A new report published by the IMF and written by Bank for International Settlements (BIS) general manager Agustín Carstens and two of his colleagues details how the digital assets revolution could blend with central banks to set the stage for the monetary policy of the future.
“We argue that the monetary system of the future should harness the new technical capabilities demonstrated by crypto but be grounded in the trust central banks provide (BIS 2022).
In other words, any legitimate transaction that can be carried out with crypto can be accomplished better with central bank money. Central bank digital currencies (CBDCs) and other public infrastructure can underpin a rich and diverse monetary ecosystem that supports innovation in the public interest.”
The BIS executives say that while the technology behind crypto assets is noteworthy, the industry has many flaws, such as extreme price volatility and lack of regulations and scalability. They say central banks can help solve these issues.
“Crypto is neither stable nor efficient. It is a largely unregulated sector, and its participants are not accountable to society. Frequent fraud, theft, and scams have raised serious concerns about market integrity.
Crypto has introduced us to the possibilities of innovation. Yet its most useful elements must be put on a sounder footing. By adopting new technical capabilities [by] building on a core of trust, central bank money can provide the foundation for a rich and diverse monetary ecosystem that is scalable and designed with the public interest in mind.”
The report cites real estate tokenization and retail purchases as an examples of how central banks can use digital assets.
“First, wholesale CBDCs (central bank digital assets) – a superior representation of central bank money for use exclusively by banks and other trusted institutions – can offer new technical capabilities…
For instance, the buyer and seller of a house could agree up-front that the tokenized payment and the tokenized title transfer must be simultaneous…
Second, at the retail level, CBDCs have great potential, together with their first cousins, fast payment systems. Retail CBDCs would work as digital cash available to households and businesses, with services provided by private companies.
Central-bank-operated retail fast payment systems are similar to retail CBDCs in that they provide this common platform while ensuring that services are fully connected. Both promise to lower payment costs and enable financial inclusion.”Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/prodigital art/Natalia Siiatovskaia