General Manager of BIS Urges Central Banks To Embrace Digital Money

The General Manager of the Bank of International Settlements (BIS), Agustin Carstens, has urged for central banks to embrace digital money. He added that the financial world is going through a revolution at the moment, and banks, being trustworthy establishments, should be in control.

The Digital Money Revolution

The head of BIS, Agustin Carstens, appears to be taking a new stand regarding digital money: He said in a recent speech that central banks need to take control over digital assets so that they can establish specific standards.

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Agustin Carstens, photo by Bank of Mexico

 

In his words, central banks deliver the needed basis for trust in the system because they can ensure security and liquidity. Besides, the responsibility falls on them to remain at the center of global payment systems; otherwise, they will fall back, and “events will overtake us.”

Despite the above, he believes that there’s a brighter future if banks work together with the private sector for better technological innovations:

“Central bank public goods improve the functioning of the monetary system. They do this by
giving the private sector greater scope to innovate, for everyone’s benefit. Central banks amplify the efforts of private-sector innovators, by giving them a solid base to build on.

This is where central banks need to focus their efforts. Today’s technological advances can certainly help to build a more efficient and more inclusive financial system, and central banks need to embrace that innovation. At the same time, their traditional functions are tailor-made for the many innovations on the horizon, including central bank digital currencies (CBDCs).”

Pro Digital Money, But Against Bitcoin

Agustin Carstens’s views against Bitcoin and its purpose are well-known within the crypto community. In his latest speech, he is still unfavorable towards the most significant cryptocurrencies and other projects from big tech companies, such as Facebook’s Libra:

“A gleaming skyscraper is an awesome sight. But when we admire one, we often overlook its foundations. These are out of sight, below ground level. But just because they are not visible, it does not mean that they don’t matter. On the contrary, they matter a lot.”

Additionally, he was even harsher in another interview from last year. While he was answering a few questions regarding cryptocurrencies, saying that “they are not money […], they cannot assume the functions of money for the simple reason of how they are created.”

Moreover, Carstens expressed further negative feelings towards their usage, and his message to young people was – “Stop trying to create money.”

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