Bank of Canada Paper Considers Central Bank-Issued Cryptocurrency

Nishanth Shetty

Nishanth Shetty

December 1, 2017 9:54 am

2440 Total Views

Cryptocurrency News

Central banks might get the advantage by issuing cryptographic versions of the fiat currencies, but the advantages would depending on whether they did so in an advanced developing economy.

 

At least that’s according to Ben Fung from the Central Bank of Canada and Walter Engert from the Office of the Superintendent of Financial Institutions, both of whom published a paper this week regarding the discussion of pros and cons for Central Banks issuing the cryptocurrencies.

However, the paper got to end on the question appearing whether is it worth for such institutions to provide cash or central bank digital currency (CBDC), should such demand drop deep enough, since it traps the query to the idea that will require coming at the expense of cash use.

It reads:

“Is it sufficient for a central bank to supply only reserves to qualified financial institutions? Put differently, is a ‘cashless society’ a sound outcome?”

 

The paper goes on to extend the six different advantages to a central bank for issuing a digital currency, but largely dismisses all but three: payments for the consumers, financial inclusion, and stability.

For customer payments, the authors write that a “CBDC will facilitate transactions that are currently foregone because of frictions that inhibit some types of transactions.” In particular, it reduces conflicts to online payments and tempting small traders to provide services on the Internet. In some economies, consumers see advantages in reducing costs for retail payments.

 

He wrote:

“Financial inclusion does not have a strong motivation for CBDs in advanced economies, including Canada.”

Finally, paper offers mixed results for improved financial stability.

On the one hand, the authors wrote:

“The financial systems in Canada and other countries feature highly levered banks conducting liquidity and maturity transformation and operating at the core of the payment system, it is well known that under some conditions this set-up can be unstable, and in severe cases the stock of inside money can contract, with adverse negative externalities for the economy.”

 

Digital money often offers a risk-free way to store customers without exposure to that risk. On the other hand, the ease of leaving bank deposits for Fiat Crypto increases economic turmoil.

The paper represents its writers’ opinions and reflects the need for Canada’s central bank.

No Comments
Reason for Hike in XRP Value Explained!!!

XRP prices seem to have Spiked Lately Ripple is generating notable gains as the huge cryptocurrency market pushed higher. According to Coindelite, the XRP token attained a value of $0.8768. Coindelite figures show that Ripple rose by 20% over the last 24 hours and has climbed to its highest since …

Amazon Web Series is Making the use of Hyperledger and Ethereum easy

Amazon Web Series to Start a New service for Hyperledger and Ethereum easy Amazon Web Services has recently announced the service it is going to launch out-of-the-box a blockchain service for Ethereum and Hyperledger Fabric protocols. AWS chief evangelist Jeff Barr wrote in a blog post: “Recently available templates allow …

Australia to Mine Bitcoins by reopening Coal Power Plant

Contract with Crypto Mining firm Signed by Australia to reopen Coal Power Plant A contract has been signed with the IOT Group, a cryptocurrency mining firm by Australia’s Hunter energy to reopen a coal power plant in the Hunter Valley Region of Australia. Although new and advancing technologies are largely …

NY Federal Reserve Chief Nominee says Cryptocurrencies can’t Replace Dollar

Digital Currencies cannot replace Paper Currency says NY Fed Chief Nominee CEO of Twitter Jack Dorsey predicted that Bitcoin would surpass all the world’s currencies in around ten years. But the man nominated to be the head of New York Federal Reserve differs. In a speech on Friday, the present …

Blue Check Mark on Twitter Doesn’t mean your Account is Safe

Bad Checks: Twitter’s Identity Crisis Costs Users More Than Bitcoin According to a Russian Writer, it’s one of crypto’s most generally embraced slogans, though one that’s becoming even more important on social media, where battling factions inclined on promoting the next big high-tech investment are presently turning the very symbols …

Bitdegree Offers Online Courses for Students with Crypto Incentives

Bitdegree a Cryptocurrency Startup Pays Students while Learning Bitdegree, a Lithuanian cryptocurrency startup wants to change the face of online education using their online platform and cryptocurrency. What is BitDegree? BitDegree an online platform with its own cryptocurrency. The firm was founded in 2017. BitDegree plans to change how education …

Press Release

shares