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Bank of International Settlements (BIS) Changes Stance on Central Bank Cryptocurrency Development

Waving flags in front of European Parliament building
In a recent interview with the Financial Times (FT), the Chief of the Bank of International Settlements (BIS), Agustin Carstens, appears to have changed his stance in regard to the issue of central banks developing their own digital currencies.
The BIS is a Swiss-based financial institution comprised of 60 global banking corporations, designed to facilitate international financial settlements and help maintain economic stability around the world. It is headquartered in Basel and maintains additional offices in Hong Kong and Mexico City.
Back in March this year, BIS Chief Carstens famously denounced cryptocurrencies and warned banks against listing or developing them during a conference at the Central Bank of Ireland. In his speech, which was reported at the time by financial news site Bloomberg, Carstens claimed that ‘central bank-issued digital currencies’ (CBDCs) threaten to undermine the current financial system and impact market liquidity.
“There are huge operational consequences for central banks in implementing monetary policy and implications for the stability of the financial system,” he stated.
More recently, the BIS had less than favorable things to say about Facebook’s new crypto project, Libra coin. The agency stated that it feels coins developed by big tech firms could potentially change the financial landscape in a rapid and unsustainable fashion. This could be partly due to the fact that big tech firms like Facebook have such a massive user base and possibly too much access to customer data.
However, it now appears the BIS are softening their approach to the emerging technology. In the new FT article, Carstens clarified that the agency is working to support the creation of digital currencies at “many central banks.”
“It might be that it’s sooner than we think that there is a market and we need to be able to provide central bank digital currencies,” he said.
The change of heart may have come as a particular surprise to those involved in the crypto community, especially considering Carstens prior criticisms of the industry. The chief has previously spoken of how he feels that cryptocurrencies are a Ponzi scheme and an environmental disaster, in reference to the high amount of energy consumption that proof-of-work (PoW) blockchains like Bitcoin (BTC) require.

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