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From U.S. to South Korea- Central banks have diverse positions on cryptocurrencies

Jan 30, 2018 Posted /  1392 Views

From U.S. to South Korea- Central banks have diverse positions on cryptocurrencies

There are several sets of questions that the cryptocurrency enthusiasts and entrepreneurs need to answer amidst the biggest digital currency heist of $500 mln in the Japanese cryptocurrency exchange have raised. Additionally, the prices have remained volatile for the major time period in January 2018. There are already enough vulnerabilities with South Korean threats and Chinese clampdowns if possessed pragmatic vision could harm the essence of the market and soon we will witness the downfall of the great cryptocurrency empire.

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In this article we will wrap-up how the world's biggest central banks are approaching the phenomenon of digital assets and what mindful resources they have planned:

The U.S. Federal Reserve's privacy woes

Federal Reserve's insight in the cryptocurrencies since its early days shows that cryptocurrencies never had a favourable sphere amongst the policymakers.  Jerome Powell who is a board member and nominee for chairman gave a statement in 2017 which suggested that technical issues with the technology remains and “governance and risk management will be critical.” Powell announced there are “meaningful” hurdles to a central-bank cryptocurrency and privacy woes are gripping as the private-sector alternatives may do the job. Randal Quarles, vice chair for supervision at the Fed, said on Dec. 1 while the central bank of the world’s biggest economy has no policy toward regulation of Bitcoin, it is “worth thinking about.”

When Europe Central Bank says it is a Tulip Mania

The European Central Bank has frequently cautioned about the hazards of spending in digital currencies. Vice President Vitor Constancio said in his September media statement compared Bitcoin to Tulip mania saying that Bitcoin isn’t a currency, but a “tulip”. His colleague Benoit Coeure warned about Bitcoin’s precarious price status, saying its connected to tax evasion and crime as it poses a major risk to the economy. ECB President Mario Draghi said in November that the influence of digital currencies on the euro-area economy was restricted and they professed no threat to central banks’ monopoly on finances.

Clampdown by the Chinese Central Bank

China since long has clarified that the central bank will have full authority over cryptocurrencies. The Chinese authorities set up a research team set up in 2014 to promote digital fiat money, the People’s Bank of China considers “conditions are ripe” for it to espouse the technology. However, at the very time, the authorities are clamping down on Bitcoin mining and cryptocurrency trading. The country and the bank have not formally announced the beginning date for introducing digital currencies, nonetheless, China remarks that digital currency could facilitate in payment efficiency and allow for better control of currencies.

Bank of Japan says no demand

Being a Cash driven economy, The Bank of Japan (BOJ) asserts that it is not thinking to issue a digital currency as there is still no demand for it.  The head of the central bank’s FinTech Center, Yuko Kawai noted that the rise of cashless transactions still remains a work in progress in the country. However, after nearly $500 million in digital tokens was looted from the Coincheck Inc. exchange in Tokyo on Jan. 26 may think to revisit some regulations. In October, he said the BOJ had no immediate plan to issue a digital currency, though it’s crucial to expand knowledge in this space.

Reserve Bank of India- a means of illicit activities

India's central bank- Reserve Bank of India asserts that cryptocurrencies are a channel to expand illicit pursuits such as money laundering and fund terrorist activities. However, the local media states that the bank has formed a study group which examines whether digital currencies supported by international central banks can be used as a legal tender or not. At present, the utilization of cryptocurrencies is a breach of foreign-exchange laws.

South Korean issuing new regulations

Authorities in South Korea is heavily concentrating on preventing cryptocurrencies from being utilized as a weapon of increasing criminal activities. The government continually presses legislation to close down cryptocurrency exchanges and the nation’s Financial Services Commission is installing a special team to investigate cryptocurrency trading. additionally, the exchanges in South Korea will soon begin with real-name account system for trading. Acknowledging this, the Bank of Korea Deputy Governor Shin Ho-soon remarked that more research and monitoring was required. Even the Prime Minister had to counteract in the matter as more and more Koreans needed to embrace Bitcoin stating that the cryptocurrencies might harm the nation’s youth.

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Tags: Cryptocurrencies Cryptocurrency trading Bank of Japan digital currencies

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