In November the Central banks of several countries have published their positions on bitcoin and cryptocurrency.
The Central Bank of New Zealand released a statement about the need to explain to the citizens the basics of cryptocurrencies and the implications of such a monetary policy. Senior Deputy Governor of the Bank of Canada stated that cryptocurrencies are assets or securities than the actual currencies. Central Bank of Brazil also addressed the issue of cryptocurrencies in November and issued a warning to investors.
The reserve Bank of New Zealand does not consider cryptocurrency a real threat to the Central financial institutions
The reserve Bank of New Zealand (RBNZ) published a paper about cryptocurrency called “crypto-currencies – an introduction to not quite non-cash money” (“Crypto-currencies – An introduction to not-so-funny moneys”). The document is 44 pages aimed at “increasing public understanding of these technologies, highlighting some of the risks of using cryptocurrency, and discuss the potential implications of these technologies for consumers, financial systems, monetary policy and financial regulation”. The paper also discusses the principles and history of cryptocurrency, and provides definitions of terms used in the industry.
It States: “Cryptocurrency expanding the mechanisms of transactions between people, enhancing competitive pressures on providers of payment services”. Despite this, the RBNZ indicates that because of the “relatively small amount” transaction performed with the use of cryptocurrency, “these new payment mechanisms is likely not able to completely replace traditional payment systems”. The document also stresses “the incompatibility of (pseudo) anonymity of cryptocurrencies …” with the issuance of loans. It is clear that cryptocurrencies are not a threat to many of the functions of traditional financial institutions.
Canada is considering crypto-currencies as assets or securities, but not as currency
Earlier this month, senior Deputy Governor of the Bank of Canada Carolyn Wilkins said that “the so-called crypto-currencies really are not currency and are not even money.” In an interview with Bloomberg, Ms. Wilkins said, “In the sense of the standard monetary theory… it is an asset or a security. And that’s exactly what should be considered cryptocurrency, and just as they are treated in Canada.”
To the question about ICO MS Wilkins said: “I am not a securities regulator, and commenting on any ICO is not within the competence of the Bank of Canada, but, in my opinion, it’s more valuable paper than currency, and should be adjusted accordingly”.
Ms. Wilkins expressed his enthusiasm for blockchain technology, adding: “Technology is the distributed Ledger underlying cryptocurrency is really promising. It provides the ability to create the efficiency of financial markets and other places that is really useful for market participants, enterprises and households”.
Central Bank of Brazil issued a “warning about the risks associated with the storage and trade of so-called virtual currencies”
The warning highlighted the inadequate protection of the investors involved in trading digital currencies, and stated that virtual currency “not issued and are not guaranteed by any monetary institution.” The Central Bank of Brazil stated that “the purchase and storage of virtual currencies” exposes investors to “hidden risk, including possible loss of all capital invested”.
Despite the grim tone of warning, the document stated that “currently, the international organization has not established the need for regulation of cryptocurrencies”, and that “currently, there are no significant risks to the national financial system of Brazil”.