Recently, Claudio Borio of the Bank for International Settlements (BIS) gave this speech at a Cato Institute Monetary Conference in Washington DC. Below I have pasted in the Conclusion section of the speech and then a few added comments.
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Let me conclude. The monetary system is the cornerstone of an economy. Not an outer facade, but its very foundation. The system hinges on trust. It cannot survive without it, just as we cannot survive without the oxygen we breathe. Building trust to ensure the system functions well is a daunting challenge. It requires sound and robust institutions. Lasting price and financial stability are the ultimate prize. The two concepts are inextricably linked, but because the underlying processes differ, in practice price and financial stability have often been more like uncomfortable bedfellows than perfect partners. The history of our monetary system is the history of the quest for that elusive prize. It is a journey with an uncertain destination. It takes time to gain trust, but a mere instant to lose it. The present system has central banks and a regulatory/supervisory apparatus at its core. It is by no means perfect. It can and must be improved. But cryptocurrencies, with their promise of fully decentralised trust, are not the answer
Paraphrasing Churchill’s famous line about democracy, “the current monetary system is the worst, except for all those that have been tried from time to time”.
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My added comments: My take on these comments is that Mr. Borio is not calling for any kind of radical change to the existing monetary system. He seems more to indicate it should just stay as is with some continued tweaking at the margins now and then. This is consistent with what we have reported here for some time now.
Please also note that he sees no significant future for cryptocurrencies.
Added note: I also continue to believe that neither the IMF nor any major central bank is on the verge of trying to implement any kind of cryptocurrency or blockchain based system at this time. I base this on information from sources I view as highly credible. I will have an additional article along these same lines in a week or so based on a new speech from the BIS.
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