According to a statement by the deputy governor of the Bank of Italy, National banks aren’t prepared –at least for now – to deal with the complications of launching digital currencies.
Fabio Panetta conveyed the keynote address for the SUERF and BAFFI CAREFIN Center Conference held at Bocconi University. In his comments, he examined the likelihood for central banks to issue digital currencies carefully, including those that fuse components of digital currencies like bitcoin or a portion of the ideas that support blockchain.
In his own words, Panetta stated, “In fact – just like banknotes – a [central bank digital currency (CBDC)] would be a liability of the central bank and would be backed by its assets. It would be supported by the credibility of the central bank and ultimately, by the rule of law. Crypto-assets, on the other hand, are a liability belonging to nobody: there is no asset that backs them up and no clear governance structure that can guarantee trust… the value of a CBDC would not suffer from the excessive volatility that affects crypto-assets.”
Panetta highlighted the lower expenses of overseeing digital currency instead of a physically distributed currency.
“Since it would be completely dematerialized, a CBDC would have very few or no storage costs and would be a convenient way for households and firms to keep liquid wealth. Mattresses could be freed from their role of vaults!”
Such impacts in his view would not “necessarily be disruptive for banks.” However, various other key issues surrounding digital currencies very well may.
For instance, Panetta asked whether computerized monetary standards ought to be traceable or “designed to guarantee, to some extent possible, anonymity.” On this, he raised moral worry for a future where banks can follow all customer exchanges and settle on choices on a person’s reliability in view of such data.
“If central banks decided to make an asset – the CBDC – free of credit and liquidity risk, possibly remunerated, and available to anybody at no cost, their role in the economy would fundamentally change… Are central banks ready to play this new role and to deal with the attendant complexities? In the short term, my answer is no.”
In the long haul, the appropriate response is hazy yet Panetta avowed the advantages of research to reveal the appropriate response are sure and, “here to stay, independently of whether one day we will live in a world with digital cash.”