Home
News
- Central Banks want to bring cryptocurrency under some form of regulatory control
- Central banks are amenable to the prospect of launching their official digital tokens
- Crypto tokens viewed as a disruptor of established financial regime
Most Central Banks do not see cryptocurrencies as a replacement for Gold as a safe deposit of value. However, most central banks are amenable to the prospect of launching their official digital tokens. On the other hand, many cryptocurrency advocates claim that crypto tokens are the best way to preserve the value of one’s assets.
An annual UBS survey of 30 leading central banks revealed that more than 80% of reserve managers did not believe that digital tokens will replace Gold or other precious metal in their foreign currency reserves.
Central banks view crypto tokens as a disruptor of established financial regimes
Many Central banks view crypto tokens as a disruptor of the established financial regime. However, they do not rule out the possibility of crypto tokens becoming a formidable force in the coming years. As a result, many Central Banks are launching pilot projects to check the feasibility of having their digital currencies backed by their national currency.
Officials did not see crypto tokens having a major impact on their reserve operations
The UBS survey also revealed that more than 57% of the officials did not see crypto tokens to impact their reserve operations significantly. A quarter of the respondents felt that Bitcoin and other digital tokens have potential as investments. However, they added that they do not seem to be affected by market sentiments as unrelated assets and are not in harmony with other markets.
Central Banks continue to maintain a cautious note as the cryptocurrency industry continues to grow by geometric proportions. Cryptocurrencies, being a decentralized form of finance and based on blockchain technology, do not have many of the drawbacks seen in the present financial regime. It is one of the prime reasons why Central Banks want to control cryptocurrencies and bring them under some form of regulatory authority.
When inflation is high, a section of investors feels that crypto tokens are a very good investment, and they help prevent the erosion of values of their assets. Many nations are facing the risk of hyperinflation due to the uncontrolled printing of fiat currencies. The move has been precipitated by the COVID-19 pandemic raging across the globe and the associated lockdowns which have crippled the economy. Central banks around the world have launched massive stimulus programs, but it has only fueled inflation.
Intense volatility of crypto tokens keeping investors away
The intense volatility of crypto tokens has kept a large number of mainstream investors away from investing. The events of the last few days have also brought open the impacts of some nation’s actions on crypto token values. The decision by China to ban Bitcoin mining had a severe effect on the importance of BTC. A combination of factors has sent the crypto market into a bearish phase. Bitcoin has lost 50% of its values and is now slowly regaining a part of the loss.
Even though Central Banks doubt private cryptocurrencies, they are dead sure they will bring their own Central Bank Digital Currency to face the onslaught of Digital Tokens. The UBS survey also revealed that over 60 percent of central bank reserve managers are sure at least one Central Bank from the G7 nations will be bringing out digital currencies for the general public in the coming five years.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
