Bank for International Settlements Exec Shows New Fondness for CBDCs
Ana Alexandre's original article for cointelegraph.com reduced by 80%
General manager at the Bank for International Settlements Agustin Carstens seems to have changed his negative stance towards central bank digital currencies, now stating that such currencies could open up new possibilities. In his speech entitled "The future of money and the payment system: what role for central banks?" published on Dec. 5, Carstens dug into central banks' approach to emerging technologies in regards to building more efficient and inclusive financial systems.
He continued noting that wholesale CBDCs - where the network participants are financial institutions - could be made compatible with the provision of central bank settlement liquidity. Wholesale CBDCs would not raise difficult financial footprint issues as they would be largely restricted to institutions that already use central bank deposits, according to Carstens. Carstens argued then that a CBDC could facilitate a bank run, enabling people to move their funds from commercial banks to central bank accounts faster, thus destabilizing the system.
At the time, he also noted that there are enormous operational consequences for the central bank in the implementation of monetary policy and the traditional market's stability. Carstens stated: "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..
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