Receive all Cointelegraph news immediately in Telegram.
Carolyn Wilkins recently warned banks about the effect that cryptocurrencies like Bitcoin can bring to the monetary policy.
Carolyn Wilkins, senior deputy governor of the Bank of Canada recently warned banks about the effect that cryptocurrencies like Bitcoin can bring to the monetary policy. According to the speech “Innovation, Central-Bank Style” Canada’s banks should manage the risks and benefits that could arise from the broader adoption of e-money.
According to Carolyn Wilkins:
“As we think about alternative futures, we have to envision a world in which people mostly use e-money, perhaps even one that’s not denominated in a national currency, such as Bitcoin. This would create a new dynamic in the global monetary order, one in which central banks would struggle to implement monetary policy. And, central banks couldn’t act as lenders of last resort as they do for their own currencies.”
The senior deputy governor of the Bank of Canada stated that according to the corporate plan the bank will explore modern financial and technology trends over the course of three years. The bank will focus on studies of modern economic statistics and behavioural economics.
We have reached out to a number of experts in Canada to learn what they think about emerging financial policy, Blockchain technology rise and latest Carolyn Wilkins speech.
Anthony Di Iorio, CEO at Decentral Consulting Services commented to CoinTelegraph:
“Carolyn Wilkins’ remarks about the value of an innovation-friendly culture are very encouraging, and it is great that the Bank of Canada is adopting a positive attitude to innovations such as the blockchain. We are also sensitive to her worries about the blockchain’s disruptive potential - how effective monetary policy can be conducted, and whether it will remain possible to for the BoC to act as ‘lender of last’ resort.”
FinTech and Blockchain technology saw a tremendous growth throughout the recent years. Carolyn Wilkins has pointed out once again that banks are worried of having difficulties to implement monetary policy while emerging technologies gain traction and popularity.
“My personal opinion is Bitcoin and crypto infrastructure will replace the need for current policies, with more people switching to e-money, price volatility will be resolved,” said Alexander Alexandrov, CEO and Founder at CoinPayments to CoinTelegraph.
“By design Bitcoin will overall increase in value so worrying about losses is only an issue during the adoption cycle. This just speaks of their lack of full understanding of what is really happening and them trying to save their failing business model. Similar to using blockchain and avoiding bitcoin as suggested by other firms. Overall this is a shift in the right direction but a clear indication of lack of understanding on what transparent and decentralized systems want.”
Manie Eagar, Co-founder and Chairman of the DiGiFIn Institute Director and founder of GriffenVentures commented:
“The key concern that Wilkins raises, and justifiably so, is: Innovation may be difficult, however, if cryptocurrencies gain real traction and usurp national currencies, is because "this would create a new dynamic in the global monetary order, one in which central banks would struggle to implement monetary policy." Seen that alternative currencies or digital currencies will make the world of value exchange more frictionless, it is time to revisit disparate regulation and standards for the internet, money, exchange, global settlement practices, security, etc.”
Manie Eagar believes that Carolyn Wilkins concern focuses on the risk of a free floating alternative currency and its potential for radical fluctuation in value with the potential losses that merchants and consumers alike might incur:
“The industry has already proved quite innovative in this regard as many exchanges and payment processors already provide instant settlement or underwrite a 'lock-in' of the value of a trade and the ruling price at the instant of transaction. This seems quite sustainable and practical in the real world to support merchant and consumer adoption.”
World banks have expressed their concerns about the impact of booming FinTech solutions for years. While they do feel being a bit behind on the latest advances some major world banks joined R3 consortiums to explore Blockchain technology and how to apply it in traditional financial system.
According to Alexander Alexandrov:
“They were ignoring [Bitcoin Blockchain technology], fighting it, laughing at it now they are trying to join. Mainly they have a real issue working in an economy where they don't get to issue "fake" money and have to really manage what goes in and out. They are now researching ways to adapt and, in my opinion, the best thing they can do is invest in the startups instead of asking their current guys to figure it out. This all seems to me like an indicator they are no longer laughing at us.”
Moreover, some banks have already tried to make their own digital currencies. The Royal Canadian Mint has even announced the MintChip digital currency project and run an employee trial in 2014. It seems that banks might start using new technologies in this direction too.
Manie Eagar said:
“From monitoring emerging trends two scenarios are quite likely - central banks will issue their own digital currencies pegged to their fiat for trading and exchange purposes; while in a hybrid model, co-exist with complementary currencies whose value could be pegged to the currency of a certain jurisdiction or allowed to 'float' in the free market as bitcoin does, for example.”
Digital currency gives an alternative vision to the future development of the financial sector. The fact that some banking institution are moving to explore, analyze and adopt some of this cutting-edge opportunities shows the major impact that this technology brings to the world.
“Financial regulators and compliance efforts will focus on the bridging capabilities of these new technologies across platforms, jurisdictions, commercial and social applications,” continued Manie Eagar.
Paul Szczesny, co-founder of Bitcoiniacs stated:
“It is encouraging to see the BoC grappling with important issues surrounding innovation, Bitcoin, and blockchain technology. These technologies are fueling a revitalization in the financial industry and present enormous opportunities for the Canadian and worldwide economy. The deputy governor is correct regarding the potential of these innovations to decentralize monetary control and reduce the influence of central banks. My hope is that the BoC takes its innovative corporate culture seriously and is open to new paradigms for financial regulation. We need to consider that non-centralized alternatives to financial regulation are not only possible, but have the potential to create a more equitable, inclusive, and transparent financial system than has ever been considered before.”
According to Anthony Di Iorio:
“Although the blockchain undoubtedly presents new challenges, it also presents phenomenal opportunities - for example, the development of a financial system that manages and distributes risk more effectively, and that gives firms greater access to liquidity via channels such as P2P lending. The attitude of the Bank of Canada indicates that we have an exciting opportunity position ourselves as the leader in this field, and the big challenge we face is to create the regulatory environment to ensure that this happens.”
Manie Eagar concluded:
“Some experts believe that it is possible to organize an entirely new structure of money, banking, and finance; one that is interest-free, decentralized and controlled not by banks or central governments, but by individuals and businesses that associate and organize themselves into moneyless trading networks.”
Follow us on Facebook
For updates and exclusive offers, enter your e-mail below.
One fine body…
Thank you for contacting us! We will reply to you as soon as possible.
Thank you for your interest in our franchise program.
We are considering your request and will contact you in due course. If you have any further queries, please contact:
Reset letter sent.
Please checkout your mailbox for password reset details