Deputy President of the Bank of Italy said the Central banks, at least in the short term, will not be able to cope with the launch of its own digital currency.
Fabio Panetta (Panetta Fabio) made a keynote report at the conference at the Bocconi University. In his speech he commented on the topic of Central banks issue digital currencies, including those that include elements of bitcoin, or some of the concepts underlying the blockchain. In the beginning of the report, Panetta said that the speech in it goes about the cryptocurrency. He said
«In fact, as banknotes, digital currency Central Bank (CBDC) will be maintained by the Central Bank and its assets. It is confirmed the reliability of the Central Bank and, ultimately, the rule of law. On the other hand, scriptactive not fall under someone’s responsibility: they are not backed by any assets, and they have no clear governance structure, which could guarantee credibility. The value of the CBDC will not suffer from excessive volatility, which affects scriptactive».
Of course, based on this logic CBDC will still be exposed to volatility, despite the statement of the representative of the Central Bank, as it may occur due to the possibility of government intervention in monetary policy.
Known and unknown
However, Panetta noted other benefits of the CBDC. For example, he said lower costs of managing a digital currency, unlike physically distributed.
«Because it will be completely dematerialized for storage, CBDC don’t have to spend a lot of money, and therefore, companies and households find it easier to keep liquid assets. Mattresses no longer have to act as Bank safes!»
Moreover, according to him, the CBDC will be an asset «without credit risk and liquidity risk». According to Panetta, is «not necessarily have a devastating impact on the work of banks». However, a number of other key issues related to digital currencies, it can be a problem for regulators.
For example, Panetta was asked whether the digital currency to be monitored or «to guarantee maximum anonymity». However, he appealed to the ethical problem which banks will face in the future, when will be able to track all consumer transactions and make decisions about the creditworthiness of individuals on the basis of such information.
«If Central banks decided to create an asset – CBDC – free of credit and liquidity risks and will be available to anyone free of charge, their role in the economy will change dramatically. Central banks ready to play this new role and cope with the accompanying challenges? In the short term I say no.
In the long term, the answer is unclear, but Panetta confirmed that the research that will help answer the question «is necessary, regardless of whether we live in a world with digital money.»
Position Panetta fully reflect the current mood of Central banks in developed countries. Despite the fact that some of them, for example, financial regulators from Norway and the UK are studying the possibility of issuing their own cryptocurrencies, most countries with advanced economies have so far refused such an opportunity. For example, recently, the Central Bank of Hong Kong refused to issue its own cryptocurrency.
Some States, however, fell under the sanctions of the Western world, see in your own cryptocurrency benefit that will help them to avoid imposed on the country’s trade restrictions. Most of these States became famous for Venezuela, which has not only released a state cryptocurrency Petro, but took a focus on promoting industry in the country. However, like many other actions of the President Maduro, the country’s policy was inconsistent – recently, it was reported that Venezuela has banned the import of equipment for mining.