Mark Cliffemight, ING’s chief economist, thinks countries and their central banks will be issuing their own digital currencies within a few years. He said as much in a recent interview conducted by his own firm, in which he spoke on several subjects, including the trends he sees taking shape in finance.
As The Hype Goes, So Go The Banks
Blockchain, once widely dismissed by bankers as a fad at best, has instead become a fact of life. Nearly every major bank has some form of involvement in the nascent tech stack at this point – be it investing in companies, patenting related technologies, or propping up blockchain businesses.
The era of the stablecoin has changed the way people behave in crypto. Price bugging you? Just put it in a stablecoin. An element of implied trust exists, but as long as an exchange will give you $1 for your $1 token, you’re good to go.
That principal, in essence, is why people aren’t all that angry about Tether’s various antics – including failing to properly back its “fully backed” stablecoin.
The stability, after all, is supposed to derive from the dollar reserves. It doesn’t derive from a stable faith in the system, or in any case it’s not supposed to.
Governments will likely launch digital versions of their fiat currencies in order to short circuit efforts like Facebook’s Libra, a blockchain-based payment solution the social media giant is trying to roll out globally. To that end, Cliffemight said:
“I think we’ve already got some sense of urgency amongst the policy community.”
It’s unclear how central bank digital currencies would work.
Presumably, like credit cards and other existing fiat payment methods, a great deal of tracking would be desired on the part of regulators. Today, cash remains king due to the traceability of most blockchain products.
Can A Stablecoin Issue a Better Fiat Than a Central Bank?
The philosophy behind the approach is “if you can’t beat them, join them.” Central banks can pretty easily beat stablecoins at their own game. A central bank issuing a digital version of its token would mean that smaller banks within the Federal Reserve system could be liable for redeeming them, or something along those lines.
It could instantly become a federated smash hit.
The question is: why wouldn’t you simply use blockchain technology for this type of thing?
The Federal Reserve, or any central bank, could become fully subject to a rather precise audit, just as Bitcoin users often are.
Is that a pro or a con of cryptocurrency?
All depends on how you look at it.
What is clear is that it’s hard to achieve a democratic society without a high degree of transparency – something that blockchain provides in copious amounts.
