Central Banks May Not Launch Cryptocurrencies In 2018

Central Banks May Not Launch Cryptocurrencies In 2018

In the financial sector, there are several major players we call central banks. In spite of the last year's cryptocurrency boom, we saw the big names of the sector keep their hands off the digital money.

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In the financial sector, there are several major players we call central banks. In spite of the last year’s cryptocurrency boom, we saw the big names of the sector keep their hands off the digital money. However, it does not mean that they underestimate the potential of virtual currencies but not

It is unlikely we will see something different in 2018. Central banks are probably not adding cryptocurrencies to their balance sheets because their goals are entirely different from those of the bitcoin buyers. Buyers hope to hit 10,000 returns on anonymous transactions while central bankers are not fond of anonymity and ought to ensure currency stability. Steady bank portfolios provide currency stability.

Whenever the purchasing power of money falls, banks turn things around by buying back large amounts of certain currencies. This happens as they sell assets from their portfolio or launching open market sales. Having in mind that cryptocurrencies’ value fluctuates by 20-30% a week, it is impossible for central banks to achieve stability. However, replacing fiat money with cryptocurrency may be used for doing political stunts.

Nevertheless, bankers flirt with the idea of launching central digital currency. It would be available for public use via blockchain, smart cards or held in ordinary accounts but on a fixed value. Central banks would probably do it if only sufficient demand occurs. But similar services are already available on private banks accounts so central banks would likely not meet such a demand from the public. The adoption of cryptocurrencies is already a thing among private payments platforms so central banks would have to compete with popular systems such as Alipay, Tencent, and the likes.

If central banks really want the public to prefer their product over well-established private platforms they must offer something privates do not. People like cash because it protects privacy, furthermore digital cash, which enhances privacy may be the next big thing. Unfortunately, central banks might not like the idea of leaving their comfort zone but if they admit anonymity value as a public service, they might end up with a product, able to stand the test of time.

Without a doubt, even if central banks do not enter the cryptocurrency world this year, they are more than willing to regulate the market in one way or another. Since digital money affects traditional markets, instability risks increase and thus pressure on the regulative nature of watchdogs increases as well.

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