Today’s the first day of much anticipated G20 Summit 2018 that is bringing together the central bank governors and finance ministers. With the rise in the state-backed digital currencies globally, this meeting might bring us closer to the fate of this popular phenomena.
Are State backed cryptocurrencies the future of money?
On the first day of the G20 Summit, the finance ministers and central bank governors are going to come together. With cryptocurrencies being center of attraction and given the central bank’s tilt towards developing their own digital currencies, this will certainly be the point of discussion.
Central Banks are increasingly shifting towards cryptocurrencies, however going by the report of the Bank for International Settlements (BIS), these state-backed cryptos negatively impacts the financial system and can lead to cross-border panics which is just an effort on central banks’ part to destroy the outside competition.
Not to mention, different banks having their own digital currency can be hard to monitor, control and regulate.
So, the question that arises here is if the G20 Summit 2018 meeting would facilitate the state-backed digital currency or would rather opt for global cryptocurrencies?
Central banks to watch Out for state-backed cryptos in G20 summit 2018
Out of 20 nations that are part of this summit, the majority of them are either interested in the state-backed digital currency, undergoing the development process or have already announced their plans. A number of these countries need to be watched out on the first day of G20 summit 2018.
When it comes to European Central Bank, it has repeatedly warned about the dangers of investing in cryptocurrency. In November though, the President of ECB, Mario Draghi stated that the impact of these virtual currencies on the economy is limited. Given ECB’s stance on digital currencies, it is most likely that this bank won’t be in favor of nations developing their own currencies.
- India’s Reserve Bank of India (RBI) has always been opposed to the cryptocurrencies, however, it has created a committee to study about state-backed digital currency and its potential use and benefits.
- Japan’s central Bank FinTech Center has no interest in creating their own cryptocurrency as it believes through the cashless transaction is on the rise, there is no demand for a digital currency yet.
- The governor of Bank of England Mark Carney sees cryptocurrencies as something that has the potential to bring revolution in the finance industry but it is a long way from developing sterling’s digital version.
- In the US, cryptocurrencies are still in its early days of investigation by Federal Reserve System and authorities believe that there are challenges like privacy in state-backed digital currency.
- The Central Bank of Russia has expressed concern over the digital currency and believes that Putin commissioned CryptoRuble, which basically violates the law doesn’t have the demand.
- China has cracked down hard on cryptocurrencies but the country’s central bank, People’s Bank of China is already running the prototypes for its own digital currency.
All that being explained, the BIS says the growth of cryptocurrencies can’t be ignored but cryptocurrencies by central banks pose stability risk. It would be interesting to watch the kind of points the meeting will put across and the subsequent decision to be achieved.