Central Banks have turned positive on Stablecoins!
Here is our pick of the 3 most important Stablecoin news stories during the week.
According to the Central Bankers Bank, the Bank of International Settlements (BIS), this week, CB speeches on Central Bank Digital Currencies (CBDCs) have turned net positive in 2020, either in their stance or because a pilot is mentioned.
But it had nothing to do with Facebook’s Libra announcement. Yeah, sure!
Net support for retail CBDCs (or centralised, where people hold money directly with the CB) remains negative but its positive count is now similar to that of wholesale CBDCs (or decentralised). There are very few negative takes on wholesale CBDCs.
No it’s not Facebook, Instead, the BIS, in a Chapter on digital payments of its annual economic report published Wednesday, said central bankers have come around to CBDCs because the technology presents an opportunity for them to shape the future of payments.
This article from Cointelegraph discusses the BIS paper and some of its implications including the change of heart. Bank for International Settlements Calls CBDCs a Potential ‘Sea Change’
Also this week, the world’s oldest Central Bank, Sweden’s Riksbank weighed in with a lengthy 99 page report on the pro’s and con’s of the various designs of CDBC. It looks at centralised, decentralised and a synthetic hybrid, which it comes down in favour of. World’s Oldest Central Bank Reviews Possible Digital Currency With Mixed Results
The Riksbank report also has an interesting analysis of private money versus public money and suggests that public money, besides providing a regulatory framework for private money also provides competition to private money so they are not tempted to over issue! Bitcoin’s design with a total issue restricted to 21m is perhaps good money after all, whilst certainly many ICO’s are obviously bad. But what about the current issuances from the largest CB’s, the Fed and the ECB?
Finally, we have a discussion about how the Pandemic is hastening Central Banks efforts as they realise the limitations of the current system. Coronavirus is hastening central banks’ efforts on digital currency plans to deliver faster pandemic stimulus
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
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