With Bitcoin and cryptocurrencies expanding all over the world, there are some central banks that are trying to regulate the market. Of course, it may seem a difficult task, but are regulations the only possible options to challenge virtual currencies? According to a former Fed governor, cryptocurrencies are the future of money and the central banks need to get involved.
Will it Be Possible To See A ‘FedCoin’ In The Future?
Some central banks feel that virtual currencies came to stay and they will not go anywhere. With this situation in front of them, what will central banks do to re-take the market lost against cryptocurrencies?
Some countries are thinking about issuing their own cryptocurrencies. We can mention the case of Venezuela or Russia. But their intention may not necessary be to challenge virtual currencies. Their main purpose is to avoid international sanctions imposed by western countries.
But according to Levin Warsh, former governor at the Fed between 2006 and 2011, central banks may think about issuing digital currencies.
Mr. Warsh commented:
“Most central banks have a view that these crypto-assets are clever, like guys in the garage did it and it’s kind of cool, or risky.”
Furthermore, he said that if he would have returned to the Fed – the possibilities existed – he would have appointed a team to think about a ‘FedCoin.’
“It strikes me that a central bank digital currency might have a role to play there,” explained Mr. Warsh. “Congress gave the Fed a monopoly over money, and if the next generation of cryptocurrencies look more like money and less like gold – and have less volatility associated with them so they would not be just a speculative asset but could be a reliable unit of account – as a purely defensive matter I wouldn’t want somebody to take that monopoly from me.”
In the future, we could see central banks implementing virtual currencies to compete against private and decentralized cryptocurrencies. But those users who want decentralization will definitely stay on the private side.