[2018-05-31] IMF Official: Central Banks Need to Compete With Crypto

[moriskarlov]

A deputy director for the International Monetary Fund's Monetary and Capital Markets Department believes that central banks need to offer "better" fiat currencies in order to fend off any potential competition from cryptocurrencies.

The suggestions came in an article published Thursday, penned by deputy director Dong He. In that article – which boasts the tagline "Crypto assets may one day reduce demand for central bank money" –  He argues that central banks may want to consider adopting some of the concepts in order to "forestall the competitive pressure crypto assets may exert on fiat currencies."

It's a notable statement and one that echoes past remarks from He as well as other IMF officials, including director Christine Lagarde. Indeed, Lagarde, back in March, said during an event that regulators should deploy some elements of the tech in order to "fight fire with fire."

He's argument in the latest piece is based on the possibility that, should cryptocurrencies and crypto-assets see wider adoption, there is a chance that central banks will lose their ability to influence the economy through tactics such as interest rate changes.

The deputy director suggested that tightening regulation could provide a boost for central banks.

"Second, government authorities should regulate the use of crypto assets to prevent regulatory arbitrage and any unfair competitive advantage crypto assets may derive from lighter regulation," He wrote. "That means rigorously applying measures to prevent money laundering and the financing of terrorism, strengthening consumer protection, and effectively taxing crypto transactions."

He also pointed to the idea of central banks creating their own digitized assets that could be exchanged in a peer-to-peer fashion

"For example, they could make central bank money user-friendly in the digital world by issuing digital tokens of their own to supplement physical cash and bank reserves. Such central bank digital currency could be exchanged, peer to peer in a decentralized manner, much as crypto assets are," the article went on to say.

It's an idea that a number of central banks are researching, though opinions differ on the effectiveness of such proposals. Just this week, for example, an official for the Hong Kong Monetary Authority (the region's de facto central bank) said that it currently has no plans for a digital currency launch in spite of its research in the area.

https://www.coindesk.com/imf-official-central-banks-need-compete-crypto/

[Carlton Banks]

The whole point of a fiat currency is that there's no need for central banks or governments to compete with free market alternatives when they simply use violence or threats instead of competing. The list of competing money systems before Satoshi published is a testament to this; Liberty Reserve, e-gold, Liberty Dollar etc all got shut down by armed agents and legal threats (which are violent threats in practice).

Bitcoin changed this by making it impossible to use violence as a weapon against it (despite far too many Bitcoin babies claiming they'll pay taxes on it anyway, I mean why not just give a mugger all your money when they're only going to come back for 70% of next year's money?). When used to defend yourself against any of the central banks' self-serving policies, there's not a single thing these violent pieces of shit can do. When their raison d'etre is theft, how can they possibly seek to compete with a currency that (when used by those with backbones) can prevent any form of theft against it, be it inflationary, seignorage or your basic garden variety tax collection theft? None of these IMF proposals are based on the idea that central banks and governments can compete by doing less stealing.

[davis196]

"digitized assets that could be exchanged in a peer-to-peer fashion"
If they create such assets,services like PayPal,Paxum and Skrill will become obsolete,which might be good for all of us.Anyway,I really doubt that any central bank is able to create and develop it`s own blockchain.
Most likely they will copy the btc blockchain.

[DooMAD]

At least they can't say they weren't warned, heh.  I think in 20 years from now, many of them will regret not heeding this advice.  It's nice to see those outside of the community acknowledging that what we're doing really does present a legitimate challenge to the established order of things and we're not going away or giving up.  This is the kind of publicity we should be seeing more of as things continue to mature.  The less talk of "bubble"/"ponzi"/"tulip" nonsense we get, the better.