The concept of crypto currencies might seem relatively new to some but in fact cryptos already exist for several years (Bitcoin even started back in 2009). The central banks of the various countries around the world are continuously addressing the benefits and problems of these online currencies.
The hard nut to crack for governments’ central banks is how to handle the various digital currencies which are private and whether to come up with their own official version in the cryptosphere.
Let’s look at how some of the giant central banks in the world are reacting:
The Federal Reserve of US
The Federal Reserve have in the recent years started investigations into the many upcoming cryptocurrencies. According to Jerome Powell, a board member, coming up with a cryptocurrency for the central bank is faced by a number of challenges including governance, privacy and risk management. Powell claimed that the private sector can best handle these challenges which in a certain way shows that there is a potential place for private cryptocurrencies.
However, the volume of the cryptocurrencies will at some time be something to look at even if it is not much of a concern at the moment.
The European Central Bank
Through its vice president, Constancio, the Central bank of Europe said that bitcoin isn’t a currency but a tulip. However, the president of the bank assured that the cryptocurrencies aren’t of any danger to the economy of the Eurozone.
Actually, there is word that the British Treasury will introduce regulations by the end of 2018 to cover digital currencies, especially Bitcoin, since there is a surge in their prices and they are gaining more and more participants. This is making the agency fear that these currencies could be used for illegal activities. These regulations which are intended to be applied in the entire EU, are supposedly supposed to ensure that the cryptocurrency traders reveal their identities as well as report any scamishious activities.
Central bank of China
Contrary to most of the governments in the world, the central bank of China has a complete control over the crypto currencies in the country and it says it is the right time to embrace the digital currencies. It started as early as in 2014 when research was done on ‘fiat’ which is a digital currency. However, private cryptocurrencies like Bitcoin and others are banned.
The Bank of Japan
For now, the Bank of Japan has no plans of introducing official cryptocurrencies. It however stresses on the importance of doing a thorough research on them.
The governor of the bank, Haruhiko Kuroda, said that offering a central bank cryptocurrency to the general public was like opening the bank to everyone.
In Japan, as of April 2017, Bitcoin is seen as “legal tender”, meaning it is treated as a currency.
The Bundesbank of Germany
According to Carl-Ludwig, a member of the board, shifting deposits into blockchains would interrupt the banking models leading to a change of the monetary policies. It views the cryptos as a speculative plaything other than form of payment.
Bank of England
Currently according to the governor of the Bank of England, digital currencies are a possible revolution in the financial. Contrary to most Central Banks, the Bank of England governor is of a contrary view that the cryptocurrencies’ blockchain technology offers a great potential in improving payments between customers and institutions as well as improving the defense of Central Banks against cyber-attacks.
Actually, the Daily Telegraph in the UK recently reported that the Bank of England will be creating their own digital currency they are calling the RScoin which is poised to take on the Bitcoin.
In the meantime, by the end of 2018, the UK government is expected to introduce new regulations to cover the cryptocurrencies especially Bitcoin so as to avert the fears of them being used for criminal activities. This regulations may cause confusion since there are already other laws in relation to cryptocurrencies, the KML and the anti-money laundering Laws (AML), which the players in the country already adhere to.
Bank of France
It advises great caution of cryptos since they normally don’t have a public institution behind them which can create confidence in the public.
Central Bank of India
In India, the crypto currencies are not welcome with their use being a violation of the foreign exchange rules since they are viewed as a source of money laundering as well as money terrorism.
However, the reserve bank has set aside a group to investigate if the use of an official digital currency could be helpful.
The Banco Central do Brasil of Brazil
This bank sees no threat of the cryptos to the financial systems and it even pledges to support any technology which seeks to make the financial system more safe and efficient.
Bank of Canada
The deputy governor of the Bank of Canada, Carolyn Wilkins, said that the cryptocurrencies are trading assets but not forms of money and should only be treated as the assets they are. However, Wilkins viewed the block technology of the cryptos as a promising technology for the financial system in making it more efficient.
Bank of Korea of South Korea
In South Korea, very many citizens have embraced the Bitcoin and it is not a crime there. However, there are fears that it could be used to propagate crime and the central bank is doing all it can to prevent that.
Russian Central Bank
There is a growing concern in Russia with the Russia’s Central Bank Governor, Elvira Nabiullina, terming them as illegalized ‘pyramid schemes’. There are also intends to use prosecutors to block any websites who allow users to access Bitcoin.
But recently, during a regulators meeting in the Russian Finance Ministry, proposals were made to register cryptocurrency miners and also license exchanges which deal with cryptocurrencies. The legalization of the miners is viewed to be beneficial since they would be taxed. However, only banks are to be allowed to exchange the cryptocurrencies with Rubles if the proposals are picked up.
The Reserve Bank of Australia
The chief of the Australia’s Central Bank, Philip Lowe, once said that the crypto currencies appeal more to criminals rather than to customers.
Currently, cryptocurrensy is treated as “intangible asset“, which makes it a subject to capital gain taxation.
Central Bank of Turkey
According to Murat Cetinkaya, the Central Bank Governor, cryptocurrencies offer a challenge to the central banks in their control of money and the stability of prices. The governor however pointed out that the technology used in crypto currencies could be a great booster in achieving a cashless economy as well as speeding up the payment systems.
The central bank of Netherlands
The country is one of the countries whose central banks have even created a digital currency by the name DNBcoin which is meant only for use within the country. According to Ron Berndsen, in charge of the DNBcoin project, blockchain technology can be applicable naturally to solve complex financial transactions.
when the announcement came, there was a lot of excitement with people tweeting all around about DNBcoin.
Scandinavian countries’ Central Banks
Starting with the Riksbank of Sweden which is already exploring options in using a digital register, the e-krona.
Norway is also following suit especially due to the reduction in the use of cash in the country. The Norges Bank is seeking to create individual accounts at central bank or an app or plastic cards.
However, contrary to its fellow Scandinavian countries, Denmark is cautioning against the use of digital currencies with the fear that it could give customers direct access to the bank’s liquidity proving to be disastrous especially in times of crisis.
The Reserve Bank of New Zealand
The acting Governor, Grant Spencer, cautioned that the huge gains of Bitcoin could turn to be a speculative bubble. Nevertheless, in an interview with TVNZ sometimes back, Spencer acknowledged that digital currencies are part of the future but he dismissed the development of Bitcoin.
The Central Bank of Morocco
Just as some countries like India, it is actually a violation of the law to use any digital currency in Morocco. Authorizes here say that the use of cryptocurrencies is like using a hidden payment systems which aren’t backed by trusted institutions and thus creating great risks for customers.
State Bank of Vietnam
In Vietnam, the State Bank of Vietnam, which is the Central Bank, is said to prohibit the use of cryptocurrencies which they refer to as illegal forms of payments. In a statement released on October 30th, the Bank indicated that as from 1st of January 2018, any act of providing, using or issuing cryptocurrencies will be subject to prosecution with a penalty of between $6,600 and $8,800.
This will certainly affect institutions like the FTP University which had okayed its students to pay for tuition using Bitcoin. It means if they go on with that as from early 2018, they will be breaching the laws. Apart from the institutions, this move will certainly affect many individual cryptocurrency trader who were hoping that the government would formalize at least Bitcoin since they had gotten used to it.
Singapore’s Central Bank
Singapore’s central bank authority, the Monetary Authority of Singapore (MAS) is said to be working on a framework to regulate the crypto currency so as to ensure that they aren’t used for illegal activities such as funding terrorism.
According to a statement by Tharman Shanmugaratnam, the Deputy Prime Minister of Singapore, although the MAS has not yet released any regulation on cryptocurrencies, it will do so if necessary and it is currently monitoring the currencies and especially the BITCOIN.
The Bank of international Settlements (BIS)
The BIS acts as the central bank of the central banks in the world.
The head of BIS, Agustin Carstens raised eyebrows due to the rate at which the prices of Bitcoin are raising without a real understanding what is behind it.
It is worth noting that Bitcoin is now a global currency and every household knows the name Bitcoin.
BIS recognizes the increased popularity of cryptocurrencies and it is considering whether the central banks should also issue their own digital currencies. One of the options being considered is having one central bank which can issue a digital currency, which can easily be converted to cash and reserves, to the public. This will certainly come with risks of bank runs and shortage of deposits for commercial leaders as well as a compromise in the privacy in the central banks’ liquidity systems.