Here is an interesting article that recently appeared in Forbes that notes that the US Federal Reserve is far from sold on the idea of central bank digital currencies based on blockchain technology. Below is an excerpt.
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"The reason these central banks are keen to adopt Bitcoin-like technology is to improve existing systems of payment (and for good reason) — but the Fed's Reserve Bank of St Louis recent paper says this misses the point of cryptocurrencies.
The Fed's report authors, Aleksander Berentsen and Fabian Schar, write: . . . . ."
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Added note: Here is link to the recent blog post by the St. Louis Fed on this topic.
Also, Bloomberg runs this article which points out that central banks around the world are far from in agreement on central bank digital currencies and that no major central bank in a developed nation seems close to moving in that direction for now. The Bloomberg article opens with this statement:
"The joke doing the rounds at last week’s spring meetings of the International Monetary Fund and the World Bank in Washington was that central banks are looking into cryptocurrencies so that their governors have something to say when they go to conferences and are asked about Bitcoin."
Meanwhile, some involved in the process do think some central banks might try a "wholesale" version of a central bank digital currency sometime in 2018. Wholesale would mean that individual citizens could not open central bank accounts and hold the currency directly with the central bank. The concern is that in a financial crisis people would likely move all their funds into their central bank account creating a run on private bank accounts. Some have discussed the idea of limiting the amount anyone could hold in a central bank account as another way to deal with the issue.
Additional note: Dr. Warren Coats sent me this link to a Reuters article that notes that even the disbtributed ledger technology is far from proving worth implementing at central banks. Here is the last paragraph from that article:
"Other technologies are also being explored to enable instantaneous settlements. The European Central Bank is planning to launch a new settlement system in November which it says will allow transactions to be conducted in real-time, but does not use distributive ledger technology."
One global payments system expert I have been hearing from for years told me some time ago that blockchain (or DLT) is not any real "breakthrough" technology in his view and as time goes by, his comments seem more and more in tune with what is happening as people try to make this technology work in the real world. Even Facebook has expressed frustration with the current state of blockchain technology as they look into their own cryptocurrency. Here is the conclusion of their blockchain guru:
"During an interview at a conference in February, Marcus said Facebook didn’t have plans to integrate cryptocurrency into its apps anytime soon.
"Payments using crypto right now is just very expensive, super slow, so the various communities running the different blockchains and the different assets need to fix all the issues, and then when we get there someday, maybe we'll do something,” Marcus said."
Also, Bloomberg runs this article which points out that central banks around the world are far from in agreement on central bank digital currencies and that no major central bank in a developed nation seems close to moving in that direction for now. The Bloomberg article opens with this statement:
"The joke doing the rounds at last week’s spring meetings of the International Monetary Fund and the World Bank in Washington was that central banks are looking into cryptocurrencies so that their governors have something to say when they go to conferences and are asked about Bitcoin."
Meanwhile, some involved in the process do think some central banks might try a "wholesale" version of a central bank digital currency sometime in 2018. Wholesale would mean that individual citizens could not open central bank accounts and hold the currency directly with the central bank. The concern is that in a financial crisis people would likely move all their funds into their central bank account creating a run on private bank accounts. Some have discussed the idea of limiting the amount anyone could hold in a central bank account as another way to deal with the issue.
Additional note: Dr. Warren Coats sent me this link to a Reuters article that notes that even the disbtributed ledger technology is far from proving worth implementing at central banks. Here is the last paragraph from that article:
"Other technologies are also being explored to enable instantaneous settlements. The European Central Bank is planning to launch a new settlement system in November which it says will allow transactions to be conducted in real-time, but does not use distributive ledger technology."
One global payments system expert I have been hearing from for years told me some time ago that blockchain (or DLT) is not any real "breakthrough" technology in his view and as time goes by, his comments seem more and more in tune with what is happening as people try to make this technology work in the real world. Even Facebook has expressed frustration with the current state of blockchain technology as they look into their own cryptocurrency. Here is the conclusion of their blockchain guru:
"During an interview at a conference in February, Marcus said Facebook didn’t have plans to integrate cryptocurrency into its apps anytime soon.
"Payments using crypto right now is just very expensive, super slow, so the various communities running the different blockchains and the different assets need to fix all the issues, and then when we get there someday, maybe we'll do something,” Marcus said."
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