BIS manager says CBDCs will result in "unpredictable" consequences

23 Mar, 2019 | Updated: 23 Mar, 2019
by Richard Allen
Opinion
BIS manager says CBDCs will result in unpredictable consequences

Augustin Carstens, manager of the Bank of International Settlements (BIS) has expressed concern over central banks issuing their own digital currencies. According to Carstens, they borrow crypto’s design while neglecting the features that make crypto liberating, CityAM reports.

Carstens made these comments during a speech at the Central bank of Ireland recently. The manager argues that if central banks, which traditionally don’t deal with customers, issue their own tokens it will result in “huge operational consequences for central banks in implementing monetary policy and implications for the stability of the financial system.”

He added that tokens issued by central banks “would change the demand for base money and its composition in unpredictable ways.”

“Central banks do not put a brake on innovations just for the sake of it. But neither should they speed ahead disregarding all traffic conditions,” Carstens said in a speech at the Central Bank of Ireland.

The bank’s manager makes the statements following several announcements from both commercial and central banks regarding their intent to launch their own cryptocurrencies.

Last month, JP Morgan said it will be launching its own cryptocurrency, JPM Coin despite CEO Jamie Dimon’s long history of cryptocurrency opposition.

Read more: IMF praises Ripple and Circle, says banks will be ‘cannibalized’

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