Private but regulated tokens could beat CBDCs, Australian central bank chief says

Cryptocurrencies issued by private companies could be superior to central bank digital currencies (CBDCs) if the companies are properly regulated, according to Reuters, Australia’s central bank governor Philip Rowe. Said there is. report.. Rowe’s comments were part of a panel discussion at the G20 Financial Officials Conference in Indonesia.

Rowe said:

“If we can make the right regulatory arrangements, we tend to think that private solutions are better.”

This is because the private sector is “better than central banks” in the innovation and design of cryptocurrency functions, Lowe explained. He added that creating a CBDC and setting up a digital token system can be very expensive for a central bank.

In the same panel as Rowe, Hong Kong Monetary Authority (HKMA) CEO Eddie Yue said that tighter scrutiny and regulation of such private tokens could also reduce the risk from decentralized finance (DeFi) protocols. Said.

According to the Atlantic Council CBDC trackerCurrently, 97 countries, including Australia and Hong Kong, are actively investigating whether they have launched their own CBDCs. While some countries are experimenting with retail CBDCs for direct consumer use, some countries are taking a more cautious approach with wholesale CBDCs for financial institutions.

The competition to issue the CBDC has been fueled by the growing popularity of stablecoins such as tethers (USDT) and USD coins (USDC). The collapse of Terra’s stablecoinTerraUSD (USTC) in May highlights the risks posed by stablecoin, creating the urgency to deploy a state-backed token, the CBDC, that regulates and provides security for such tokens. rice field.

Rowe said:

“If these tokens are widely used in the community, they need to be state-sponsored or regulated in the same way that bank deposits are regulated.”

Yue said that regulating stablecoin can reduce the risk of DeFi. Stablecoin and cryptocurrency exchange form gateways to DeFi projects, and regulation of these gateways is easier than regulation of DeFi, Yue explained.