Potential cryptocurrencies and other forms of digital currencies issued by central banks show promise as the use of cash is “rapidly disappearing,” a report issued today by a consortium of global regulators, the Bank for International Settlements.
Some central banks are analyzing a cryptocurrency or other forms of digital currency that could be made widely available to the general public and serve as an alternative safe, robust and convenient payment, instrument, said the study by the group that includes the Federal Reserve and 59 other central banks for nations that account for about 95 percent of world gross domestic product.
“(Central bank cryptocurrencies or other forms of digital currencies) could bring substantial benefits,” said the whitepaper from the Basel, Switzerland-based consortium.
But the study warned several worries loom.
The study said cybersecurity could be a big problem with central bank cryptocurrencies and digital currencies since they would open to many participants and points of attack.
Fraud was also raised as a concern because large amounts could be easily transferred
A central bank introducing cryptocurrency or other form of digital currency would have to insure anti-money laundering and counter terrorism financing controls were adequate, the study cautioned.
Greater secrecy for Bitcoin transactions could be coming from recent innovations, the central bank consortium predicted.
Currently, all Bitcoin transactions are publicly recorded using the payer’s and the payee’s public addresses, very much like e-mail addresses, however these addresses do not necessarily reveal the true identity of users, the report explained.
The payment of interest on deposits of would likely enhance the attractiveness central bank cryptocurrencies or other digital currencies, the authors predicted.
The study said the currencies would have a limited impact on monetary policy implementation. The report didn’t touch on regulation of private cryptocurrencies.
That topic is expected to be a major topic of discussion at the G20 meeting next week in Buenos Aires, Argentina. Treasury Secretary Steve Mnuchin and French Finance Minister Bruno Le Maire have said they will bring it up at the conference.
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