According to Australia’s central bank governor, private tokens, if well regulated, could be much better than state-backed digital currencies. Phillip Lowe, speaking at a meeting of G20 financial officials in Indonesia, said:
“If these tokens are going to be used widely by the community, they are going to need to be backed by the state, or regulated just as we regulate bank deposits”.
🇦🇺 Bank of Australia governor says
digital tokens issued by private companies could be better than central bank-issued tokens assuming proper regulation.
— Watcher.Guru (@WatcherGuru) July 17, 2022
Remarkably, this statement comes from the same governor who in 2017, within months of his appointment, had rather negative things to say about Bitcoin. During a public appearance in Sidney Lowe, speaking about Bitcoin at that time, he stated.
“When thought of purely as a payment instrument, it seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions”.
Now, however, his opinion on cryptocurrencies seems to have radically changed. Now that about 90% of central banks, according to a BSI study, are studying or have already initiated CBDC projects, the governor has gone so far as to say he prefers private cryptocurrencies to these state-backed digital currencies.
Speaking to his G20 colleagues, Lowe added:
“I tend to think that the private solution is going to be better — if we can get the regulatory arrangements right — because the private sector is better than the central bank at innovating and designing features for these tokens”.
According to the governor, private tokens are more efficient and innovative, so central banks should focus on those, partly because state digital currency projects are very expensive for states.
However, Lowe also stressed the importance that these private tokens be properly regulated, and possibly that they should be guaranteed by the state. Agreeing fully with Lowe was Eddie Yue, the governor of Hong Kong’s central bank, who called for more regulations and controls, especially on stablecoins, to avoid issues like what happened with Terra.
“Despite the Terra-Luna incident I think crypto and DeFi won’t disappear – though they might be held back – because the technology and the bushiness innovation behind these developments are likely to be important for our future financial system”,