Cryptocurrencies are now afraid to come true, says central bank BIS

Recent internal collapses in the crypto market show that the long-warned dangers of decentralized digital money are now embodying, the Bank for International Settlements said.

BIS, the central bank’s global governing body, issued a warning in its next annual report, urging further efforts to develop attractive central bank digital currencies.

Agustin Carstens, BIS’s general manager, said the recent collapse of TerraUSD and Luna’s “Stablecoin” and a 70% drop in Bitcoin, the forerunner of the crypto market, as indicators of the existence of structural problems. Pointed out.

Without government-backed authorities who can use tax-covered reserves, any form of money will ultimately be unreliable. “

“I think all these weaknesses pointed out earlier have materialized quite a bit,” Carstens told Reuters. “You can’t go against gravity … at some point you really have to face music.”

Analysts estimate that the overall value of the crypto market has fallen by more than $ 2 trillion since November as the problem snowballed.

Mr. Kirstens said the meltdown was not expected to cause a systematic crisis, just as bad debt caused a global financial crisis. However, he emphasized that the losses would be quite large, and that the opaque nature of the crypto universe caused uncertainty.

“Based on what we know, it should be pretty manageable,” Carstens said. “But there are many things we don’t know.”

Central Bank Digital Currency (CBDC)

BIS is long-term skeptical of cryptocurrencies, and its report provides a vision for a future currency system in which central banks will take advantage of Bitcoin and similar technological advantages to create digital versions of its own currency. rice field.

Currently, about 90% of financial authorities are investigating the CBDC, as is known. Many want it to equip the online world with them and dodge cryptocurrencies. However, BIS wants to coordinate important issues such as ensuring that it works across borders.

The pressing challenges are primarily technical, similar to the need for standardized coding in the mobile world in the 1990s. However, as relations between Western countries with countries such as China and Russia decline, there are also geopolitical problems.

“This (interoperability) is a topic that has been on the G20 agenda for quite some time, so I think it’s quite possible that this will move forward,” Carstens said. “Life” trial using CBDC.

Asked how long it will take for the CBDC’s international standards for interoperability to be agreed, he said: Probably 12 months is too short. “ Cryptocurrencies are now afraid to come true, says central bank BIS

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