Manufactured by Central banks, cryptocurrencies (CBDC) can improve monetary policy and reduce the risk of financial crises. This was stated by the former head of Federal Corporation on insurance of contributions (FDIC) Sheila Bair in the article “the fed needs to take seriously its own digital currency”, according to Ð’itcoin.com.
According to the author, mistrust of banks has become a major impetus for the development of bitcoin as means of payment. The latter can successfully operate completely outside the banking system.
“Unfortunately for Satoshi Nakamoto, bitcoin failed miserably as a method of payment”, — said the author.
Also, in her words, “extremely high volatility” made the first cryptocurrency a popular target for speculative investment.
Former Chairman of the FDIC has advocated that the Central banks issue their own digital money, to win the trust of economists and other financial institutions. It describes issued by the Central Bank of digital currency as a “stable like a traditional Fiat”. The development and production of CBDC could provide greater financial stability during the economic crisis, when people lose confidence in banks.
“So they take their uninsured money out of the banking system, disrupting the free flow of payments. Suppose that consumers can convert their Bank deposits into the digital currency, which will be released and supported by the fed? They no longer need to worry about the stability of banks”, — said the official.
At issue own cryptocurrency “the fed will have much more effective tools for the conduct of monetary policy.”
“The fed manipulates the money supply by buying and selling the securities of a select group of large banks and paying them interest on the reserves that they store (about 1.75% currently). It is beneficial to banks, but not the rest. The last 10 years are proof that the current money supply is not enough to stimulate economic growth. The super-rich got much richer while the middle class is struggling” — said Bair.
Consumers will benefit from the “lack of checking accounts, with their expensive service charges and overdraft interest”, while the company receiving CBDC “will do without the Bank commissions, which are particularly burdensome for small businesses.”
“In the case of mass transfer Bank accounts at CBDC, the cost and inefficiency of current payment systems will be significantly reduced”, she added.
We will remind, in may, the Federal reserve Bank of San Francisco said that the launch of futures on bitcoin to the end of 2017, played a key role in the subsequent price movements of the cryptocurrency.
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