The time when cryptocurrencies and Banks would go hand in hand is not so far away. The recent drive in crypto adoption brought about by people looking to bypass various economic hurdles has also drawn the attention of banks and financial institutions from all over the world.
The anonymity and untraceable nature of cryptocurrencies, especially Bitcoin, has been heavily abused ever since crypto has been in the limelight. This has been a major factor why authorities either want to ban it or regulate it. Adding to this, most of the cryptocurrencies have private organizations backing them, this is another big no for the regulators and banks as they are not willing to hand over any kind of economic authority to private companies.
No to private Crypto
Discussing the aforementioned facts, the Governor of Bank of France, Francois Villeroy de Galhau, has stated that the sole power of issuing electronic currency or cryptocurrencies should be vested in the hands of the central banks and not private companies like Facebook’s Libra.
According to the Reuters report, Villeroy de Galhau mentioned that his response isn’t aimed at Facebook’s currency and instead his comments are a response to the extremely rapid development of blockchain and the need for central banks to adapt and implement a digital cash alternative.
He noted how the growing use of digital currencies has resulted in the declining use of fiat. He said:
“In some northern European countries, notably Sweden and the Netherlands, the use of bank notes is falling extremely quickly and they are wondering whether we need to give citizens the right to digital money that is no longer a physical bank note but which has the same quality, notably the security of a central bank.”
He stressed over the fact that digital currencies should be in full control of the government only because “money is a public good of sovereignty.”
The recent CBDC race that has engulfed central banks all over the globe is fuelled by the very notion that private cryptocurrencies would take the power away from the regulators. The rally was led by China and It is already widely known that China does not approve of Bitcoin and the bevy of other decentralized coins. With that being said, China is working hard to launch what will probably be considered the first Central Bank Digital Currency (CBDC).
Facebook’s Libra is another example of regulators not tolerating private institutions that aim to be the facilitator of a global digital currency. The project has been criticized from the moment it was announced. The fact that a private company, with involvement in a major data leak scandal, would have access to the financial data of millions of people from all across the globe doesn’t play well with the regulators.
The real idea behind blockchain and cryptocurrency was pure decentralization. The CBDCs would just be centralized currencies like Libra; the only difference is the fact that national cryptocurrencies would be run by public operators. CBDCs would like be using blockchain and cryptocurrencies but in the most antithetical way.