At the November fintech festival, which was held in Singapore, Christine Lagarde, director of the Internationalcurrency fund, spoke positively about the ideacreation of cryptocurrencies by central banks (CBDCs – Central Bank Digital Currencies). At the event, she highlighted some of the benefits of CBDC, which include financial inclusion, privacy and security.
Despite this, some of the other staffThe Federal Reserve Bank of St. Louis (Fed) does not share Lagarde's enthusiasm for cryptocurrencies. Over the past two years, Fed researchers have not dealt with cryptocurrencies or national cryptocurrencies.
Fed researchers Fabian Shar and Alexander Berentsen wrote the following in February:
The main characteristic of cryptocurrencies is theirincompatibility with central banks. No reputable central bank will ever issue digital currency. The reputation risk is too high.
They further added that compliance with strict KYC and AML laws is a critical measure to prevent fraud, drug trafficking and terrorist financing.
Researchers have indicated that thethe bank will centralize the cryptocurrency, therefore, it will not be a cryptocurrency, but simply an electronic form of money. They stressed that it would be wrong to call CBDC a cryptocurrency.
If decentralization is taken away from cryptocurrency,there will be little left of her. Centralized digital money issued by a central bank – This is electronic central bank money. It is worth mentioning that the technology for issuing centralized virtual money appeared long before the blockchain.
Due to its decentralized naturecryptocurrencies, there is no need for one institution to manage the system. Bitcoin, for example, has a built-in issuance mechanism and is designed to be transparent, neutral, reliable and secure as it provides a high level of privacy.
Fed researchers have already realized that digital currencies provide services that a central bank or government cannot provide. They conclude by writing:
This is still a very young technology and there are many risks associated with it. Overall, we believe that the idea of creating “Fedcoin”, or any other central bank cryptocurrency, is simply naive.
Based on materialsatozmarkets.com
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