When using a cryptocurrency private, users may be giving their information to a small number of interested parties. It is an illusion that this type of asset decentralizes the operation of financial services, warned the Director of the Bank for International Settlements (BIS, for its acronym in English), Agustín Carstens.
According to central banker, the technology companies that manage and supply the virtual assets aim to profit from these operations. That is, by using them, “the user could be handing over the keys to the monetary system to companies whose interest is private.”
Speaking at a conference at Goethe University, he highlighted that this concentration of power in a few particular issuers fuels widespread risks, such as flight, speculation, high leverage or liquidity mismatches.
As long as they operate without a regulator, or a regulatory framework, or guarantees, the use of private virtual currencies is a source of risk, he stated.
For private providers digital currencies, users are customers and their service depends on how many service providers accept the exchange of the virtual asset as payment for their goods or services. But there is no safeguard for the personal data that customers do provide.
The Director of UNTIL He explained that central banks are making progress in developing their own digital currencies (CBDC), since they do recognize that the use of new technologies streamlines financial operations, lowers operating costs and can favor the operation of cross-border payment systems.
In addition to the fact that it does favor banking penetration to the benefit of developing countries.
Stablecoins, borrowed credibility
Carstens explained that unlike stable currencies, or stablecoins, the value of digital currencies issued by central banks, CBDCs, will be granted precisely by the certainty that a central bank is backing them.
So-called “stable currencies” like Tether The DAI, are associated with the value of a fiduciary currency such as the dollar or the euro, material goods such as gold or some real estate, which helps maintain a stable price.
The CBDC they do not have to “borrow the credibility of other currencies,” he stressed.
In the speech, which he titled “Digital currencies and the soul of money”, he took up a part of Goethe’s literary work Faust, to explain that the basis for the use of fiduciary money is trust, the certainty granted by the fact that a central bank issues it, because behind its value there is a regulatory framework, value guarantees and financial supervision.
The call is then to work together with technology companies, to take advantage of their innovations in the development of safe and reliable digital currencies, issued and operated by central banks.
In 2024, Mexican digital currency
It should be remembered that Bank of Mexico informed Congress since mid-December that it is developing its own digital currency and that under a scheduled program, it will probably be ready in the year 2024.
Within the Annual Report on the Exercise of the powers conferred by the Law for Transparency and the regulation of financial services that Banxico delivered on December 16, they explained that they are taking as a basis the characteristics that the clearing and settlement infrastructure already has. of Interbank Electronic Payment System (SPEI).
In other words, Banxico’s digital currency operates 24 hours a day, 7 days a week; instant payments, high availability, standardization of processes and robust measures for risk management as well as cyber resilience.
“The project has among its objectives the opening of accounts for the registration of a digital currency for both banked and unbanked people, thereby contributing to financial inclusion,” they specify in the document.
In addition, it seeks to expand the payment possibilities in the economy under the premises of speed, security, efficiency and interoperability, that is, its interaction with other payment systems.
In the same document, the central bank specifies that the development of what will be the digital currency of the Bank of Mexico, seeks to “lay the foundations for innovation by having a versatile asset from the technological point of view for the implementation of mechanisms of automation and programmability for the use of financial services”.