Category: Central Banks

Fed Chairman Powell Addresses Cryptocurrencies

WolfStreet.com, Wolf Richter | July 23, 2018
During his testimony before the House of Representatives Committee on Financial Services, Federal Reserve Chairman Jerome Powell, was asked by representatives Patrick McHenry (R-NC) and Juan Carlos Vargas (D-CA) about the Fed’s thinking on cryptocurrencies. “Instead of pussyfooting around the issues, as Fed chairs used to do, he refreshingly stepped right into it, with both boots on the ground, so to speak,” wrote Wolf Richter.

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Competition Issues in the Area of Financial Technology

European Parliament Think Tank, Fraile Carmona, A. Gonzáelez-Quel Lombardo, R. Rivera Pastor, C. Tarín Quirós, J. P. Villar Garcia, D. Ramos Muñoz, L. Castejón Martín | July 2018
This EU study focuses on analyzing potential anti-competitive factors and their impact both in the FinTech ecosystem and in the concrete services of banking, payments, digital currencies, personal finance, InsurTech and enabling technologies and infrastructures. “The arrival of permissioned cryptocurrencies promoted by banks, even by central banks, will reshape the current competition level in the cryptocurrency market, broadening the number of competitors,” cautioned the authors. “However, the market power of banks in traditional banking services might be used to limit competition in the cryptocurrency market through pre-emptive acquisitions or predatory pricing schemes.”

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Cryptocurrencies: Looking Beyond the Hype

Annual Economic Report, Bank of International Settlement | June 17, 2018
“Cryptocurrencies promise to replace trusted institutions with distributed ledger technology,” according to the Bank of International Settlements. “Yet, looking beyond the hype, it is hard to identify a specific economic problem which they currently solve. Transactions are slow and costly, prone to congestion, and cannot scale with demand. The decentralized consensus behind the technology is also fragile and consumes vast amounts of energy. Still, distributed ledger technology could have promise in other applications. Policy responses need to prevent abuses while allowing further experimentation.”

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The Pros and Cons of Issuing Central Bank Digital Currency

Central Bank of New Zealand | June 2018
Over the past decade, the financial services industry has been disrupted by a range of new technologies, including private, digital currencies. Central banks are considering how they can take advantage of these new technologies to help deliver their core functions. This article by the Central Bank of New Zealand evaluates the pros and cons of a public digital currency issued by a central bank across four functional areas: currency distribution, payments, monetary stability and financial stability.

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