More harm than good: Circle speaking about the launch of central bank digital currencies
With the development of the crypto industry and the increasing influence of the blockchain in the world, states’ interest in creating their own electronic national currencies has surged.
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The central banks of the United States, China, Mexico, and other countries are exploring the market and preparing or have already launched their digital money to free themselves from the restraints typical for conventional fiat currencies in international transactions.
The US has long been looking at the possibility of launching a digital dollar. So, recently Lael Brainard, vice-chairperson of the US Federal Reserve, said that the government should speed up the process of introducing a national cryptocurrency to keep up with other countries and strengthen the position of its national currency. In this regard, the regulator organized public discussions, during which the issue of launching a digital dollar was discussed.
In turn, the Circle company, the issuer of the USDC stablecoin, reacted sharply negatively to the willingness of states to find their niche in the crypto industry. It is reported by zycrypto. According to the company’s management, the launch of digital currencies by central state banks will cause more problems than benefit society. Circle believes that the emergence of state cryptocurrencies will negatively affect innovations and place risk on financial stability. In addition, according to experts, the development of new digital currencies for central banks is meaningless since private stablecoins already have all these advantages. Instead of increasing financial inclusion and reducing costs, the introduction of a digital currency could lead to the opposite result.
Inflation is growing, and at the same time, the population is experiencing a decrease in confidence in state financial structures. People who can’t receive banking services will be much more passive to interact with banks and use products from the Central Bank,
Circle experts noted.
Also, in their opinion, there is a risk that, when introducing the circulation of digital national currencies, whether they involve interest or not, the Central Bank may face a problem with the quality of security, which, in turn, may destabilize the two-tier banking system.
It should be noted that the Central Bank of Mexico has postponed the launch of the digital peso until 2025. According to the Mexican authorities, this was done because of introducing additional functionality and speeding up payment processes.
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