By
Chimamanda U. Martha
April 24th, 2024
General manager of BIS who has a powerful name and is influential enough to change the industries says central banks’ cryptocurrencies may have a chance.
Smart people are famous for revaluation of their beliefs, and now the Bank of International Settlements (BIS) is ready to try implementing their own cryptocurrency to stay ahead of the market. The same man who was calling for a “clampdown on Bitcoin”, Agustín Carstens, now says:
“We have a responsibility to be at the cutting edge of the debate. There is really no choice but to do so, as otherwise, events will overtake us…”
By “events” Carstens presumably means thousands of companies that show significant results within the cryptocurrency space.
Bank of International Settlements’ head Agustín Carstens is famous for his previous negative attitude toward cryptocurrencies in general and Bitcoin in particular. He used to accuse crypto startups of “piggybacking” on banks. He also said that cryptocurrencies threaten financial stability, and warned about the numerous threats. Earlier he stated:
“To date, many judge that, given cryptocurrencies’ small size and limited interconnectedness, concerns about them do not rise to a systemic level. But if authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability.”
BIS is the bank where all the world central banks hold their accounts. It is not a surprise that their head has a negative attitude toward a new payment solution. Indeed, to implement cryptocurrencies on a global level, people must first change their attitude to the money. Blockchain also opens a wide range of uncovered threats, from hacking to sophisticated ones like crypto-jacking or instant mining.
Banks Could Use Cryptocurrencies for Interoperability and Inner Accounting
Earlier, we could see only the shady exchanges like BTC-e making huge profits. Money laundering is a profitable business, as well as online casinos and drug shops. Good soil is always captured by couch grass before the useful culture is seeded. Here is Carstens’ opinion regarding the matter:
“The current fascination with these cryptocurrencies seems to have more to do with a speculative mania than any use as a form of electronic payment, except for illegal activities”
Carstens notes that small banks should not consider issuing their private cryptocurrencies. However, he said that the central banks may be issuing their cryptocurrencies. Because those coins will be tied to the institutions that hold large deposits. He even stated that it is dangerous to issue such cryptocurrencies to local people, because they may prefer using them and abandon private banks.
BIS head also warned that the crypto firms that work with cryptocurrencies for a long time have the insider information and insights. He claims that, if the majority of financial players jump into the market, they will lose money against people who know the unwritten rules of the industry.