Agustin Carstens, president of the Bank for International Settlements (BIS), known as the “Central Bank of the Central Bank,” said that global central banks may have to issue their own digital currencies earlier than expected. Previously, Facebook recently announced plans to build its own stable currency.
Agustin Carstens, president of the Bank for International Settlements (BIS), told the Financial Times that the organization supports world central banks in their efforts to create digital versions of national currencies.
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“Many central banks are working on this; and we are working hard to support them,” Carstens told the Financial Times.
“This may be faster than we think, and we need to be able to provide digital currency to the central bank.”
A number of national central banks, including the Riksbank, are developing their own version of the digital currency to allow the public to directly obtain the currency issued by the central bank. Currently, only private sector lending institutions can borrow directly from the central bank.
Central bankers, including Carstens, dismissed the first wave of cryptocurrency in history, treating Bitcoin and Ethereum as speculative tools, due to their use of the most widely used national currencies, such as the US dollar and the euro. Value fluctuations, they cannot be considered as currency.
However, Facebook's plan to create Libra attracted the attention of officials including the Basel-based Bank for International Settlements (BIS). Libra is a stable currency that is linked to a basket of undetermined legal tenders and is supported by assets that have not yet been determined.
In an excerpt from the digital currency extracted from the annual report of the Bank for International Settlements (BIS), the currency supported by technology giants may “rape rapidly establish a dominant position in the global financial arena” and pose potential for competition, stability and social welfare. Threat.
Carstens said that
“The question is how will this currency be used? Will it find information or data that can be used for credit supply, and how to protect data privacy? A very simple way to regulate this is to start with anti-money laundering rules. This is a very urgent And obvious problems."
However, Carstens acknowledged that the development of other areas of the foreign exchange market will affect the central bank's pursuit of stable currency projects.
“There is evidence that there is demand for the central bank’s digital currency, but it’s unclear whether this demand exists. Maybe people can do what they want by using the e-wallet provided by the bank or financial technology company. It depends on The development of payment systems."
In its annual report released on Sunday, BIS called on governments to reduce some of the pressure on the central bank to support the economy by introducing more fiscal policies and structural reforms.
“The effectiveness of a very aggressive monetary policy will diminish over time. It will always have some impact, it is effective against the recession – but it is not the backbone of higher sustainable growth,” Carsten Said. He added that long-term ultra-loose monetary policy will bring greater financial risks.
Many central banks of the Bank of International Settlements (BIS), including the Federal Reserve and the European Central Bank, are considering launching a new round of additional monetary easing to boost confidence in the global economic downturn.
The Fed seems ready to cut interest rates, while the European Central Bank (ECB) president Mario Draghi hints that his management committee may cut interest rates or restart the 2.6 trillion euros quantitative easing (qe) bond purchase program in response Investors are worried about a sharp slowdown in economic growth.
New challenges facing the central bank
But Carstens said:
“The slowdown in growth is mainly caused by trade tensions. Monetary policy is neither sufficient nor the best policy to offset this impact.”
This concern is based on geopolitical uncertainty—primarily for the consequences of US President Donald Trump's anti-globalization “US priority” policy.
In recent weeks, Trump has attacked Draghi and Federal Reserve Chairman Jay Powell, who accused Draghi of wanting to ease monetary policy, while the latter accused him of not cutting interest rates fast enough.
Carstens said he believes that the public still widely supports central bank officials in formulating monetary policies that they deem appropriate.
“My personal point is that the public supports the central bank to protect the currency exchange rate and has the ability to support economic growth.”