Are cryptocurrencies a threat? Banks Bank requires MNBC

Crypto, but better – the digital currency of the Central Bank (MNBC) has become a hot topic in the crypto community. Recently, we have seen that the British Parliament has taken a positive position one pound digitale or Brazil takes a big step digital real. Each for specific reasons NationMNBCs can be converted into a financial instrument inevitableso it made sense that they would finally disturb the pattern coordination central banks, namely the Bank for International Settlements (BIS). The latest newsletter of the Basel Institute addresses these issues MNBC from the perspective of cryptocurrency-related system threats. Explanations.

The Bank for International Settlements takes a dim view of Bitcoin and cryptocurrency

The bank for international settlements is an organization responsible for cooperation between national central banks and global financial stability. Based in Switzerland, brings together 63 country and its recommendations are scrutinized by local and international authorities. Its newsletters are published several times a year, and the latest is newsletter number 66 crypto and MNBC.

Matteo AquilinaBRI’s chief economist analyzed the events the end cryptocurrency market and I learned the following lesson:

“Recent failures in digital asset markets highlight the importance of addressing the risks presented by cryptocurrency before these markets become systemic. »

Not alone exchange Centralized and Decentralized Crypto Sharing Points of Vulnerability with traditional finance (TradFi), but in many ways they are more fragile. effect sinkproblems liquidity or even asymmetryinformation are all threats specific to the sector.

The BIS says that cryptocurrencies may pose a systemic risk to international stability

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The international body is considering different responses to the crypto-threat

Face this reality and fact “Crypto won’t disappear by itself”the BIS reviews three arrows reactions it is possible to protect consumerthe market and stability the world of finance: prohibit, contain and regulate.

Forbid attractive because it protects the international financial system and consumers. However, this option is contrary to certain founding principles of societies and stop benefit from crypto-related innovations. Moreover, there seems to be a clear prohibition vsit is complicated to implement.

Contains isolating crypto-related activities from the rest of the market is the second option. This will allow you to take advantage of innovations limiting risks. The idea would be to create a firewall between the two markets, but the implementation remains to be seen complex. Nor can it prevent possible risks to consumer or financial stability.

Finally, the last option is regulation. It is about the application of the same type of tools control Compared to TradFi Mapping precisely high-risk areas in CeFi and especially in DeFi. But the contours of this solution are currently vague and unclear due to the opacity of DeFi and especially its potential points of contact with TradFi.

Digital Central Bank Currencies (MNBC) represent the advantages of cryptocurrency with its disadvantages.  Yes to technology and no to decentralization, this is essentially the bank's discourse for international settlements.
According to BIS economists, central bank digital currency is the way to go

…and ultimately favors a central bank digital currency (MNBC).

Finally, BIS considers a middle path that will simultaneously take the strengths of each option. Here is an overview of the results leading directly to the conclusion MNBC :

“Central banks can encourage innovation in TradFi to contribute to a more efficient monetary system. (…) Certain areas of cryptocurrency can be used to improve the way services are provided. [Les MNBC] can help reduce the cost of payments, improve financial inclusion, strengthen system integrity, and promote user control over data and privacy. »

The BIS I would like all of them advantages cryptocurrency while retaining all of the classic central bank currency. Therefore MNBC it is the new favorite tool of international institutions. We will see how each country takes their recommendations into account. But Russia, which has been excluded from the BRI since the war in Ukraine began already reached the same conclusions.

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