Australian Central Bank Governor Supports Privately Issues Tokens Over CBDCs
- The governor of Australian central bank support privately issued tokens over CBDCs
- The Hong Kong Monetary Authority (HKMA) chief called for greater regulations
The Australian central bank governor believes that the properly-regulated consumer-focused digital currencies issued by private entities are better than the bank-issued tokens.
While speaking in a panel discussion at the G20 event in Indonesia this Sunday, Lowe’s statements spread like wildfire in the crypto community.
Moreover, the Hong Kong Monetary Authority (HKMA) chief Eddie Yue joined Lowe in the same discussion and said that the greater regulations on consumer-focused digital tokens could also help lower risks from DeFi, which aims to employ computer code to eliminate the need for financial intermediaries in lending, investing, and other financial operations.
The statements appeared to focus on the creation of so-called stablecoins, privately issued tokens like USDT and USDC, whose value is pegged to that of a traditional asset, generally the U.S. dollar. These privately-issued stablecoins are typically used for payment and as a store of value.
The risk possessed by such tokens for financial systems was recently noted when one such stablecoin by Terraform Labs collapsed, resulting in a major market downturn. However, UST and LUNA were only used to support a network of DeFi applications rather than for actual payments.
“If these tokens are going to be used widely by the community, they are going to need to be backed by the state or regulated just as we regulate bank deposits.”
Lowe stated.
He said that “the private solution is going to be better” if the regulatory bodies impose appropriate rules on them. The statement highlights his belief that the “private sector is better than the central bank at innovating and designing features for these tokens, and there are also likely to be very high costs for the central bank setting up a digital token system.”
Moreover, the HKMA Chief also agreed to bring better regulations as DeFi initiatives are accessible through stablecoins and crypto exchanges, and their regulation is simpler than that of the actual products.
“Despite the Terra-Luna incident, I think crypto and DeFi won’t disappear-though they might be held back-because the technology and innovation behind these developments are likely to be important for our future financial system.”
Yue stated.
In order to create a strong regulatory system for such tokens, Lowe and his fellow panelists agreed that more efforts need to be taken.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
