Some exciting news for crypto enthusiasts ahead of Bank of International Settlement’s forthcoming annual report. It will incorporate two new chapters on cryptocurrencies.
The misconception that “many cryptocurrencies are ultimately get-rich-quick schemes.” would be the primary focus of this upcoming report. BIS explained that the credibility of currency is dependent on public trust in the issuing entity or institution. It further stated that in order to gain success, it should have a proven record of earning the said trust. But as seen in many institutions, in terms of cryptocurrencies, it is observed that the short experience only shows that technology despite being sophisticated, is nothing but a “poor substitute” for what is called a hard-earned trust
It has been proved that public cryptocurrencies are not feasible options for a cashless society, as mentioned in an opinion piece written in part by Markets Committee chairperson Jackqueline Loh in March. This subject matter was tapped by BIS in the report.
BIS further added that digital currencies especially the ones issued by central banks, would bring with them unwelcomed side effects and according to the bank, financial instability has become worse by supporting banks’ clients funnel their money, from their respective accounts much quicker.
BIS agrees that in order to gauge the full potential, more research needs to happen but at the same time it does accept that a digital currency of such nature would actually prove to be beneficiary for payments. They also presented a neutral perspective on distributed ledger applications, hinting that a promising technology does not mean it will be widely used by banking institutions which are frequent critics of cryptocurrencies in the past.
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