Home / Blockchain News / The Central Bank has an opportunity for a more stable financial system

The Central Bank has an opportunity for a more stable financial system

On 27th June the Economic researchers have identified digital currencies at the Kiel Institute for the World Economy so, currencies are issued by a central bank RBI for more financial stability system, on the other hand rejecting the acceptance for cryptocurrencies at the same time reported by Cointelegraph auf Deutsch.

On 26th June the Bitcoin published their news about the Kiel researchers who distinguished between digital or virtual currencies from cryptocurrencies, which they are going to serve as a guide to the “Monetary Dialogue” in the ECON Committee of the European Parliament.

The traditional central bank currencies do not pay attention to the viable alternatives of cryptocurrencies. According to their report, the bank said:

“Currently, cryptocurrencies such as Bitcoin could not supplant traditional currencies to any significant degree. The available technology faces severe limitations regarding scalability. In particular, it would be prohibitively expensive to conduct even a moderate share of the transactions now handled via traditional currencies through cryptocurrencies.”

For Financial opinion assets related information the Kiel Institute instead of being a medium of exchange, cryptocurrencies and related assets for the less used vehicle. As there is no fixed value of any assets and they cannot be valued rationally, which in turn would lead to strong price fluctuations, which in turn will invite more speculators.

The additional effect on lack of regulation increases through non-transparency.
The digital currencies represent an opportunity for central banks, the analysis continued by stating the confusion due to the loss of importance of traditional bank accounts.

“To avoid recurrent instability of the banking system, commercial banks would need to come up with more reliable funding sources than deposits. As the fractional reserve character of the current banking system can be a major source of instability, such a disruptive change is not necessarily a bad development, but could finally pave the way for a more stable financial system.”

The Bank of Thailand and the Central Bank of the Bahamas are the some of the global banks considering and introducing their own digital currencies.

The Bank of England governor is considered a heavyweight in the international monetary system, he said continuing that “he was open to the idea of a central bank digital currency.

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