The head of Chile’s central bank thinks a central bank-issued digital currency is not going to be available any time soon.
During a recent speech, Mario Marcel spoke about blockchain and cryptocurrencies. He talked about their positives including efficiency and also about negatives like a flash crash.
He also talked about various central bank projects and said a practical central bank currency was years away.
“[Central bank digital currencies (CBDC)] seems to lead inevitably to the replacement of the classical role of central banks at the top of a tiered liquidity system to that of a massive retailer, where deposit-taking may soon combine with loan-making,” he told attendees, adding: “This means that a real CBDC may still be many years away.”
In fact, central bank digital currencies will be far different than normal cryptocurrencies and much less free.
By definition, if a central bank runs a digital currency, it will be in charge of the value and volume of money. Of course cryptocurrencies define at least the volume of money now. But central banks make regular adjustments.
Central banks like the digital part of cybercurrencies but they want a lot more control. A central bank cybercurrency ultimately will operate like a regular state-run currency today except it will be digital.
One the other hand, cybercurrencies combined with numerous breakthroughs will give people options outside of state-based money. It may be difficult for central banks to regain the kind of control over currency that they had in the 20th century.
Investors and central bankers both have access to “private” money now. A fight may be brewing between the two sides.