Central bank: crypto 'derives value based on make believe', threatens financial stability
The report also notes that, historically, private currencies have not ended well.
"They create parallel currency system, which can undermine sovereign control over money supply, interest rates and macroeconomic stability," the report argues, adding"For developing economies, cryptocurrencies can erode capital account regulation, which can weaken exchange rate management." The report also warns that FinTech companies pose various risks, and that powerful, cashed-up tech companies may make matters worse.
"BigTechs can scale up rapidly and pose risk to financial stability, which can arise from increased disintermediation of incumbent institutions," the document asserts. "Moreover, complex intertwined operational linkages between BigTech firms and financial institutions could lead to concentration and contagion risks and issues relating to potential anti-competitive behaviour."The document also weighs central bank digital currencies and notes that while they'll be considered a digital alternative to cash and individuals may have stored balances of the currencies, current thinking is that such deposits won't attract interest payments.
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