Representatives from the European Central Bank, regulators from leading countries including the United States and the United Kingdom on Thursday last week met to discuss on the potential of creating an operating manual forcentral bank digital currencies (CBDCs).
According to a press release, the Central banks aim to strike a balance between keeping up with cryptocurrencies and concerns that the new technology could upend commercial lenders.
Given the spectacular rise in Bitcoin and other cryptocurrencies, Central Banks across the globe have began plans to issue their own state backed digital currencies commonly knowns as CBDCs.
Lagarde on CBDCs
“Central banks have a responsibility to ensure that citizens have access to the safest form of money – central bank money — in the digital age. These reports are evidence that policy makers are enhancing their domestic projects with international cooperation, sharing ideas on the best technological innovations to provide fast, easy and secure means of payment in the 21st century,” said ECB president Christine Lagarde, chair of the group of central bank governors responsible for the report.
Meanwhile, United States Federal Reserve Chair Jerome Powell has said that the central bank has no plans on banning the use of cryptocurrencies. Powell added that a central bank’s digital currency could replace some of the uses for stable coins and cryptocurrency, but would not replace them fully.
However, Powell was also in favor of regulating stable coins, saying it was “appropriate” as they are doing the same work as other assets that are regulated.
The Wall Street Journal reported on Friday that the Biden administration could decide to regulate companies that issue stablecoins in a similar manner that it regulates banks. The decision could include an obligation for the companies to register as lenders, the report added.
The White House might also ask the country’s legislative branch to “create a special-purpose charter” that would suit the companies’ business model.