BIS GENERAL MANAGER: CENTRAL BANKS GENERATE TRUST, NOT BIG TECHS OR ANONYMOUS LEDGERS

In an increasingly digital world, the very essence of money is being debated. BIS general manager: Central banks generate trust, not big techs or anonymous ledgers 3 years ago According to the boss of the international institution owned by central banks, it is central banks that are best positioned to shape the future of money.Who should control it? According to the general manager of the Bank for International Settlements, Agust n Carstens, sound money should not be based on trustless, permissionless, and anonymous ledgers, but on trust, and more specifically trust in central banks.Who can we trust with it? Wednesday, Ma. About Us. RegisterAgustín Carstens, the General Manager of the Bank for International Settlements (BIS), has firmly weighed in on this critical discussion. Central banks are the institutions best placed to provide trust in money in the digital age and will continue to be, according to Agust n Carstens, general manager at the Bank forIn a recent speech titled ""Digital currencies and the soul of money,"" Carstens articulated a compelling vision: the future of money should be shaped by central banks, not by big technology companies or anonymous, decentralized ledgers. BIS general manager: Central banks generate trust, not big techs or anonymous ledgers PANews ｜ According to the boss of the international institution owned by central banks, it is central banks that are best positioned to shape the future of money.He argues that the foundation of sound money lies in trust, and that central banks are uniquely positioned to provide this trust in the digital age.The rise of private stablecoins and decentralized finance (DeFi) has sparked a global conversation about the future of fiat currency, but Carstens believes that central bank-led innovations are the best path forward.He cautions against ceding control of the monetary system to profit-driven private entities or systems built on trustless, permissionless, and anonymous ledgers, emphasizing the need for accountability and stability in the world's financial system.This article will delve into Carstens' arguments, exploring the role of central banks in maintaining trust and stability in a rapidly evolving financial landscape. Trusted News Discovery Since 2025. Global Edition. Saturday, FebruWe will unpack the risks associated with alternative systems and consider the implications for the future of money.

The Soul of Money: Trust, Not Technology

Carstens' central argument revolves around the notion that the very soul of money is trust.It's not about the technology used to facilitate transactions; it's about the confidence that users have in the system itself.This confidence stems from the belief that the money will hold its value, that it can be used to purchase goods and services, and that the system is stable and reliable.

He posited a crucial question: ""Which institution is best placed to generate trust?"" His answer is unequivocal: central banks.

Why Central Banks?A Foundation of Stability and Accountability

Central banks have a long history of providing stability and oversight to the financial system. In a speech titled Digital currencies and the soul of money, Agust n Carstens, the general manager of the Bank of International Settlements, criticized private stablecoins and decentralizedThey are responsible for:

• Maintaining price stability: Controlling inflation to ensure that the value of money doesn't erode over time.
• Supervising banks and financial institutions: Ensuring that these institutions operate safely and soundly, protecting depositors and the broader financial system.
• Acting as lenders of last resort: Providing emergency liquidity to banks during times of crisis, preventing systemic collapses.
• Implementing monetary policy: Managing the money supply to influence economic activity.

These responsibilities, coupled with their inherent public mandate, position central banks as institutions that are accountable to the public good, fostering a sense of trust and stability that is essential for a functioning monetary system.

Consider the 2008 financial crisis.Central banks around the world stepped in to provide liquidity and support to the financial system, preventing a complete meltdown.This demonstrated their commitment to safeguarding the economy and the value of money, bolstering public confidence.

The Challenge of Big Tech Stablecoins

Carstens raises significant concerns about the prospect of big tech companies issuing stablecoins.While these stablecoins may offer convenience and efficiency in payments, they also raise fundamental questions about trust and accountability.

• Concentration of power: Handing over control of the monetary system to a few dominant, profit-driven private entities raises concerns about potential abuse of power.
• Lack of transparency: The operations of big tech companies are often opaque, making it difficult to assess the risks associated with their stablecoins.
• Data privacy concerns: The vast amounts of data collected by big tech companies could be used to monitor and control users' financial activities.

Imagine a scenario where a large tech company's stablecoin becomes the dominant form of payment. Agust n Carstens, the general manager of Bank of International Settlements (BIS), has criticized private stablecoins and decentralized finance (DeFi), arguing that central bank-led innovations are the best positioned to shape the future of fiat.This company could potentially control access to the financial system, dictate transaction fees, and even censor transactions based on its own interests.This would undermine the principles of fairness, accessibility, and neutrality that are essential for a healthy financial system.

The Risks of Anonymous Ledgers and Decentralized Finance (DeFi)

Carstens is equally critical of decentralized finance (DeFi) and systems built on anonymous ledgers. BIS general manager: Central banks generate trust, not big techs or anonymous ledgers 2 years ago According to the boss of the international institution owned by central banks, it is central banks that are best positioned to shape the future of money.While DeFi promises to democratize access to financial services, it also comes with significant risks.

• Lack of regulation: The decentralized nature of DeFi makes it difficult to regulate, creating opportunities for fraud and illicit activities.
• Volatility and instability: Many DeFi protocols are highly volatile and susceptible to sudden crashes, putting users' funds at risk.
• Complexity and opacity: The technical complexity of DeFi makes it difficult for ordinary users to understand the risks involved.

The collapse of TerraUSD (UST) in 2022 serves as a stark reminder of the risks associated with DeFi.This algorithmic stablecoin, which was supposed to be pegged to the US dollar, plummeted in value, wiping out billions of dollars in investor losses. 2.8K subscribers in the cryptopricesalerts community. Our trackers will post any relevant info about cryptos. Wanna see more? See you onThis event highlighted the fragility and lack of trust in many DeFi protocols.

Central Bank Digital Currencies (CBDCs): A Trustworthy Alternative

Instead of relying on big tech or anonymous ledgers, Carstens advocates for the development of central bank digital currencies (CBDCs). According to the boss of the international institution, it is central banks that are best positioned to shape the future of money.CBDCs are digital forms of fiat currency issued and backed by the central bank.

CBDCs offer several potential benefits:

• Enhanced efficiency and security: CBDCs can streamline payments and reduce the risk of fraud.
• Financial inclusion: CBDCs can provide access to financial services for those who are currently unbanked or underbanked.
• Improved monetary policy: CBDCs can give central banks more tools to implement monetary policy.

By leveraging the trust and stability of central banks, CBDCs can provide a safe and reliable digital alternative to private stablecoins and DeFi. BIS general manager: Central banks generate trust, not big techs or anonymous ledgersFor example, a CBDC could be used to facilitate instant and secure payments, reduce transaction costs, and promote financial inclusion by providing access to digital financial services for individuals who lack traditional bank accounts.

Building Trust in the Digital Age: The Role of Central Banks

Carstens emphasizes that central banks must adapt and innovate to maintain their relevance in the digital age. BIS general manager: Central banks generate trust, not big techs or anonymous ledgers by Rss Feed from web Janu written by Rss Feed from webThis includes:

• Developing secure and efficient payment systems: Investing in the infrastructure needed to support digital currencies and other innovative payment methods.
• Strengthening regulatory frameworks: Developing clear and consistent regulations for digital assets and financial services.
• Promoting financial literacy: Educating the public about the risks and opportunities associated with digital finance.

By taking these steps, central banks can ensure that the digital financial system remains safe, stable, and accessible to all.

The Importance of Regulatory Clarity

One of the key challenges in the digital finance space is the lack of regulatory clarity. My main message today is simple: the soul of money belongs neither to a big tech nor to an anonymous ledger. The soul of money is trust. So the question becomes: which institution is best placed to generate trust? I will argue that central banks have been and continue to be the institutions best placed to provide trust in the digital age.This uncertainty creates confusion for businesses and consumers, and it can also stifle innovation. BIS general manager: Central banks generate trust, not big techs or anonymous ledgers 风险提示：央行等十部委发布《关于进一步防范和处置虚拟货币交易炒作风险的通知》,请读者提高风险意识，理性看待区块链。Central banks and other regulators need to work together to develop clear and consistent rules for digital assets and financial services.

For example, there is currently no global consensus on how to regulate stablecoins. cointelegraph.com: According to the boss of the international institution owned by central banks, it is central banks that are best positioned to shape the future of money.Some jurisdictions treat them as securities, while others treat them as payment instruments. According to the boss of the international institution owned by central banks, it is central banks that are best positioned to shape the future of money.This lack of uniformity makes it difficult for stablecoin issuers to operate across borders.

Promoting Financial Literacy and Education

Many people lack the knowledge and skills needed to navigate the complex world of digital finance. In addition to the global monetary system led by central banks, he envisioned a world where big tech-powered stablecoins are the dominant form of money, and another where the bulk of financial activity is decentralized and runs on distributed ledgers.Central banks and other organizations have a responsibility to promote financial literacy and education, helping consumers understand the risks and opportunities associated with digital assets.

This could include providing educational resources, conducting public awareness campaigns, and working with schools and universities to incorporate financial literacy into their curriculum.

The Future of Money: A Central Bank-Led Approach

Carstens envisions a future where central banks play a central role in shaping the digital financial landscape. A big tech stablecoin may be an attractive proposition at first sight but it raises fundamental questions about trust in the monetary system since it would entail handing over the keys to a few dominant and profit-driven private entities that are accountable only to their shareholders.This future will likely involve a combination of:

• Traditional fiat currency: Cash and other forms of physical currency will continue to play a role, particularly for smaller transactions and for those who prefer to use cash.
• Central Bank Digital Currencies (CBDCs): CBDCs will provide a safe and efficient digital alternative to cash, offering many of the benefits of private stablecoins without the associated risks.
• Regulated private stablecoins: Private stablecoins that are subject to strict regulatory oversight could also play a role, providing additional payment options and fostering innovation.

This hybrid approach will ensure that the financial system remains stable, accessible, and innovative, while also protecting consumers and preventing illicit activities.

Addressing Common Concerns About Central Bank Control

Some critics argue that giving central banks more control over the digital financial system could lead to censorship and surveillance.They worry that central banks could use CBDCs to track and control users' financial activities.

However, Carstens argues that these concerns are overblown.He emphasizes that central banks are accountable to the public and that they are committed to protecting privacy.He also points out that CBDCs can be designed with privacy-enhancing features, such as anonymity-preserving technologies.

Privacy Considerations in CBDC Design

It is crucial that CBDCs are designed with privacy in mind.This could involve using technologies such as zero-knowledge proofs or homomorphic encryption to protect users' financial data.It is also important to have clear legal frameworks in place to govern the use of CBDC data.

The Importance of Transparency and Accountability

To maintain public trust, central banks must be transparent and accountable in their operations.This includes being open about their policies and decisions, and being subject to independent oversight.

Conclusion: Embracing Innovation While Upholding Trust

Agustín Carstens' message is clear: trust is the cornerstone of a sound monetary system, and central banks are best positioned to provide that trust in the digital age.While innovation is essential, it should not come at the expense of stability and accountability.As the financial landscape continues to evolve, central banks must adapt and innovate to maintain their relevance and ensure that the benefits of digital finance are shared by all.The future of money hinges on striking the right balance between innovation and trust, and Carstens believes that central banks are uniquely equipped to lead the way.We must foster a future where financial systems are safe, reliable, and accessible to everyone.Ignoring this warning would be detrimental for financial systems worldwide.

Key Takeaways:

• The soul of money is trust, not just technology.
• Central banks are best positioned to provide trust due to their history of stability and accountability.
• Big tech stablecoins and DeFi pose risks related to concentration of power, lack of transparency, and regulatory gaps.
• Central Bank Digital Currencies (CBDCs) offer a trustworthy alternative, promoting efficiency, inclusion, and improved monetary policy.
• Regulatory clarity, financial literacy, and privacy considerations are crucial for the successful implementation of digital currencies.

What steps can individuals take to become more informed about the future of money and the role of central banks?Consider researching CBDCs, exploring reliable news sources, and engaging in thoughtful discussions about the future of finance.The more informed we are, the better equipped we will be to navigate the evolving digital landscape.