While public interest is their top priority he thinks bitcoin does not have a plausible claim to become the money of the future.
Timothy Lane, the Deputy Governor of Bank of Canada discussed yesterday about how the Corona pandemic has paved the way for digitalization, and the bank is already exploring what a digital currency ecosystem will look like. Until last year, he was of the opinion that digital currency should be built as part of a contingency plan but the recent development in the digital payments during Corona pandemic has made him think that the world has been changing faster than he expected. They already engaged three university project teams and the reports are about to release today.
Interestingly he thinks bitcoin cannot become the money of the future and is deeply flawed as methods of payment. He is definitely monitoring bitcoin and the echo system closely because he indicates how the recent spike in bitcoin price is driven by a tween from Elon Musk.
Even in this increasingly digital economy, though, cryptocurrencies such as bitcoin do not have a plausible claim to become the money of the future. They are deeply flawed as methods of payment—except for illicit transactions like money laundering, where anonymity trumps all other features—because they rely on costly verification methods and their purchasing power is wildly unstable. The recent spike in their prices looks less like a trend and more like a speculative mania—an atmosphere in which one high-profile tweet is enough to trigger a sudden jump in price.
And he thinks only a central bank can guarantee complete safety and issue a digital currency.
In response to the second question, if the public does want a digital cash-like currency, some good reasons illustrate why a central bank—a trusted public institution—should issue it.
Currency is a core part of the Bank’s mandate, and the integrity of our currency is a public good that all Canadians benefit from. Only a central bank can guarantee complete safety and universal access, and with public interest—not profits—as the top priority.
While there is a lot to take from his remarks, one thing I like is that, unlike India, he did not mention about any proposal of banning cryptocurrencies . Of course, if a central bank issues a digital currency, majority of the population will have to adopt to that. But they should also be given the freedom to use cryptocurrencies at their own risk. And most importantly, while all the risk is taken by individuals, the government only benefits by charging a tax from any profit made by individuals. So there is no point in banning cryptocurrencies and forcing the public to use the digital currency.
In my personal opinion, anything forced is not going to be successful. I hope we can get some feedback from our Canadian friends like @drakos. You can read the full post at :
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