Bank for International Settlements Says: Central Bank Digital Currency May Lead Banks to Run on

nOutburst assessment: The Bank for International Settlements stated that while digital currencies can bring more convenient payment methods, taking into account the behavior of people in passionate situations, the convenience of such payments will also increase the pressure on banks to run. Moreover, this phenomenon cannot be eliminated through the intervention of other agencies. For currencies based on distributed ledger technology, some agencies are already considering it, and it is unclear what impact this prediction will have.n
nTranslation: Annie_Xun
According to the Bank of International Settlements (BIS), the digital currency issued by the central bank (CBDC) may lead to more drastic bank runs during financial stability.n
This is what some people call a “central bank’s central bank.” It is argued that those who want to develop and publish fully digital currency must “carefully weigh” the impact of this, especially when it comes to monetary policy and overall stability. BIS currencies of this nature “may contribute to payment but require more work to assess the full potential.”n
n“Universal CBDC may lead to a high degree of instability in commercial bank deposit funds. Even if the design mainly considers the use of payment, it may lead to a rapid and large-scale rush to the central bank to challenge commercial banks and central banks to cope with this situation. The capacity of the situation.”n
nFinally, the authors of the BIS report once again mentioned this issue, assuming a situation in which digital money provides depositors with a convenient way of capital transfers, and in the case of bank runs, even powerful banks will encounter problems.n
n“According to the background, the flow of deposits in the environment that should be passionate may be very large. An important element of this system-scale flow is the sensitivity of depositors to the actions of others. The more other depositors leave the weaker banks, The greater the stimulus for yourself, the presence of CBDC will sharpen and widen the incentive for today’s run, as CBDC may be the preferred destination, especially if deposits are not insured or deposit insurance is limited, weaker banks will face running Even strong banks will face a withdrawal trend because of CBDC.”n
nn”Even if you are desperate to provide a large lending institution, it will be very difficult to prevent such a run.”n
nBIS’s attitude towards the application of distributed ledger technology is relatively neutral. The past report shows that even though the technology has great potential, it is unlikely to be widely used by banking institutions in the near future. This contrasts with the sharp criticism of cryptocurrency by leading BIS leaders in the past.n
Whether this kind of prediction will hinder the central bank from issuing such currencies is not yet known. At present, some institutions are already considering adopting some cryptocurrency elements in digital currency projects.n

Bank of International Banking Member Releases Central Bank’s Digital Currency Analysis Report

nOutburst Comments: The Bank of International Settlements has been averse to cryptocurrencies, but this sentiment has not interfered with the objective thinking of its employees. Recently, the heads of the two working groups of the bank submitted an analysis report based on the central bank’s digital currency (CBDC). They emphasized the impact of such digital currencies on central banks and financial markets, but also showed that the advantages of cryptocurrency technologies need to be used, and introduced the concept of “wholesale CBDCs”. Overall, the report provides a more comprehensive overview of CBDC and is worthy of reference.n
nTranslation: Inan
Bank for International Settlements Issues Warning on State-Owned Cryptonic Currencyn
Klaus Löber from the European Central Bank and Aerdt Houben from the Dutch Central Bank are the heads of two working groups of the Bank for International Settlements. They submitted a 34-page document entitled “Central Bank Digital Currency.” According to the foreword, the document aims to “highly summarize the effects of the central bank’s digital currency (CBDC) on payments, monetary policy, and financial stability. This analysis reflects its preliminary thinking on this rapidly developing field and is further The beginning of the discussion and research work. The document also stressed that the issuance of CBDC needs careful consideration.”n
The word “prudential” appeared many times in the report. For example, “Every step in the issuance of CBDC must be considered carefully and comprehensively. It is necessary to further study the effects it may have on interest rates, intermediary structure, financial stability, and financial supervision. The impact on the prices of other assets and other assets is still not clear, and it is worth further exploration.”n
The Bank for International Settlements has been very active on the issue of cryptocurrency recently. Last month, his governor said, “Although cryptocurrency may be seen as a payment system that does not require government involvement, it has become a combination of bubbles, Ponzi schemes, and environmental disasters.”n
At present, cryptocurrency seems to have become an increasingly important topic, at least some of the central banks have begun to consider this new thing. Although the Bank for International Settlements released its disregard for cryptocurrency last month, the report did not completely deny state-owned cryptocurrencies. It “found that wholesale CBDC may be useful for payment, but more work needs to be done to assess its full potential. Although the basic mechanisms for the implementation of monetary policy will not be changed by CBDC, its dissemination may be affected.”n
Wholesale CBDC is more suitable for central banksn
The report emphasized: “Many forms of CBDC are possible. They have different implications for the payment system, monetary policy transmission, and the structure and stability of the financial system. This report analyzes two major CBDC variants: wholesale and universal. Wholesale models limit access to predefined user groups, while general-purpose models allow extensive access.”n
In contrast, “general-purpose CBDCs may have a wide range of impacts on banks and the financial system. Commercial banks’ reliance on customer deposits may become less stable because deposits may be more easily transferred to under pressure. In addition to financial stability, the central bank needs to carefully consider the impact of the effectiveness of financial intermediation.”n
The report supports the wholesale CBDC:n
n”The combination of wholesale CBDC and the use of distributed ledger technology may increase the efficiency of settlement involving securities and derivatives transactions. The current implementation of the wholesale payment scheme – in line with the central bank system’s capacity, efficiency and robustness Requirement – Looks similar to existing infrastructure, and the advantage is not obvious, although future proof of concept may vary depending on the system design, but before the Central Bank can effectively and safely implement new technologies supporting wholesale CBDC , more experiments and experience are needed.”n
nObviously, too many general-purpose cryptocurrencies, even if supported by the state, will undermine economic stability, but this does not mean that the more effective aspects of the technology should not be applied to the central bank’s settlement layer. Of course, the Bank for International Settlements like blockchain technology. So far, the only central bank in developed countries that has seriously considered CBDC is the Swedish central bank, and its research on “e-krona” will not be completed until next year.n

Malaysian Central Bank Criticizes ICO Project Using Misleading Logo

nOutburst assessment: The Malaysian Central Bank issued a statement stating that various documents of an ICO project in the country illegally used national emblems, central bank logos, country codes, and 14-point star signs. It is pointed out that such publicity may mislead consumers and remind the public to guard against investment risks. Both the country’s central bank and the securities commission have stated that they will closely monitor the ICO project.n
nTranslation: Annie_Xun
An ICO originator in Malaysia was marked by the country’s central bank as a token sales campaign that violated the regulations.n
A warning issued by the country’s Central Bank (BNM) said that the central bank had noticed Coinzer, a cryptocurrency project, noting that the project’s token design plan, white papers, and websites used the national emblem and the BNM logo.n
The picture released by the Central Bank further shows that in addition to the logo and national emblem, the design also uses the 14-point star logo and country code of Malaysia.n
n”BNM wants to declare that it does not authorize or support the cryptocurrency platform Coinzer. It is recommended that the public beware and carefully evaluate the risks of investing in digital currencies.”n
nBNM’s warning is a signal that the country’s regulatory authorities are further monitoring domestic ICO projects. Unauthorized promotion methods may mislead investors.n
On January 9, the Malaysian Securities Commission (SC) issued an injunction to a start-up company before it launched the ICO.n
At the end of last month, SC and BNM issued a joint statement and further committed to closely monitoring ICO projects.n
At the time, the two regulators stated that “both agencies will continue to monitor these projects and will not hesitate to take action on anyone who carries out illegal or unauthorized activities.”n

Mario Draghi reiterated that Bitcoin regulation is not the responsibility of the European Central Bank

nBankruptcy comment: ECB President Mario Draghi pointed out last fall that the bank has no right to oversee cryptocurrencies such as bitcoin. Recently, he reiterated this view once again, saying that this work is not the responsibility of the European Central Bank. Although the Bitcoin market has undergone many major events since he last made this announcement, none of this clearly changed his perception of bitcoin. This may indicate that the ECB is still not going to focus on cryptocurrencies for the time being.n
nTranslation: Inan
ECB President Mario Draghi said regulation of cryptocurrencies is not a job for the European Central Bank.n
In the ECB’s #AskDraghi series of videos, Draghi said he sees many Twitter users asking if the European Central Bank will regulate or even ban Bitcoin.n
In response to this question, he said:n
n”This is not the ECB’s responsibility.”n
nDraghi will also respond to a college student’s “whether to recommend buying bitcoin” issue.n
He pointed out he was “serious” about buying bitcoin because he did not think bitcoin was a currency and claimed that the value of bitcoin fluctuated too much and was not as stable as the euro.n
Turning to the decentralized nature of cryptocurrencies, he said: “The euro is backed by the European Central Bank, the U.S. dollar is backed by the Federal Reserve, the currency is backed by the central bank or its government, and Bitcoin does not.n
Draghi is not the first to express this view on cryptocurrency and its regulatory issues. He said in September 2017 that the ECB “has no power” to regulate bitcoin, and in November said the impact of the cryptocurrency on the world economy was limited.n
Just as the European Central Bank released the video, the bank also published an article explaining bitcoin explaining in more detail its perception of bitcoin.n
In addition to the price fluctuations mentioned by Draghi and the lack of institutional or government support, the article also pointed out that Bitcoin is not widely accepted and that such “transactions are slow and expensive.”n
At the same time, the article also mentioned that the user can not get the legal protection when the wallet is black and bitcoin is stolen.n

European Central Bank Executive Board member Mersch expressed concern about cryptocurrency “gold rush.”

nBankruptcy Review: The managing director of the Bank for International Settlements once said that the modern endorsement of public monetary credit must be trusted, flexible and tested, and as a result, it is a scam and bubble to criticize the cryptocurrency. ECB Executive Board members also expressed concern, but his focus was on cracking down on illegal use and collecting data to analyze how to conduct reasonable and effective supervision. The EU’s top securities regulator, the European Securities and Markets Authority is also the center of gravity for the new year with cryptocurrency regulation, not a ban. At least for the moment technically, the credit endorsement of cryptocurrencies is an advantage, and the only thing that needs to be done is the test of time.n
nTranslation: Annie_Xun
ECB Executive Board member Yves Mersch expressed support for the recent statement by Agustin Carstens, managing director of BIS, Bank for International Settlements, calling Bitcoin a bubble, a Ponzi scheme and a threat to the central bank.n
The Financial Times reported that Mersch said that although regulators have taken a wait-and-see approach to cryptocurrency, “its agenda has been advanced” due to the acceleration of speculation at the end of last year. “n
However, while BIS shares the same concerns with Carstens, the market has not yet reached a level sufficient to affect the overall economy.n
In fact, the central bank is “more concerned about the social and psychological impact of market speculation.”n
Mersch said:n
n”There is so much cash flow, just like gold rush, but no gold.”n
nHe also mentioned the illegal use of cryptocurrencies in money-laundering and terrorist financing, and may require a solution to “force” non-regulated exchanges to report transactions and provide the ECB with “data to identify better response scenarios.”n
Carstens argued on February 6 that cryptocurrencies could become “parasites” in the financial system and must apply the same standards as banks and payment services. Do not allow cryptocurrencies to vandalize the central bank’s credit.n
At that time he said:n
n”A trusted, flexible, proven modern way of providing credit for the public money is an independent central bank.”n
nThe day before Mersch issued a statement, the EU’s top securities regulator, the European Securities and Markets Authority, released a report that cryptocurrencies will be one of the top priorities in 2018.n
In its 2018 regulatory calendar, one of the five major tasks of the year was to monitor developments in financial innovation, including cryptocurrencies and blockchains.n

ECB executives say cryptocurrency regulation is not a top priority

nRunaway Comment: According to the ECB’s comments on cryptocurrencies so far, the agency appears to be in no rush to oversee the cryptocurrency market. Recently, the chairman of the Bank’s supervisory committee reiterated this position in an interview, noting that although it is scrutinizing cryptocurrencies and is willing to take regulatory measures where necessary, it is clearly not the focus of this activity. The reason may lie in the fact that the current role of cryptocurrencies in global financial activities is not particularly important and does not pose a threat to the entire financial system.n
nTranslation: Inan
In an interview with CNBC on February 7, a senior European Central Bank (ECB) executive said cryptocurrency regulation is not a top priority for the agency, indicating that it is taking a modest stance on the regulation.n
Daniele Nouy, ​​chair of the ECB’s Supervisory Board, also noted that ECB-regulated banks are “very, very slow” in this regard, although she is not sure if Europe will take any further regulatory action on cryptocurrencies.n
She told CNBC:n
n”We looked at the issue from a regulatory perspective and are ready to take some action when needed, but for the time being it is not our top priority.”n
nAt the same time, more and more sources claim that cryptocurrency regulation will be one of the main topics for discussion at the upcoming G20 summit in Argentina in March.n
At last month’s World Economic Forum (WEF), European Central Bank Executive Board member Benoit Coeure said he hopes the international community will be able to focus on cryptocurrency regulation at the upcoming G20 summit in Buenos Aires.n
Although French Finance Minister Bruno Le Maire called for international regulatory cooperation on cryptocurrencies in December, the ECB appears less interested in getting involved personally.n
ECB President Mario Draghi told the European Parliament on Monday in Strasbourg: “We did not observe that the regulated institutions hold digital money systematically.” He also said:n
n”In fact, credit agencies have little interest in digital currencies such as bitcoin.”n

World Gold Council: Bitcoin is inferior to gold, but may shake the central bank’s position

nWalkout comment: The World Gold Council recently released a new investment report detailing its view of cryptocurrencies, such as bitcoin, which is so prevalent today. The group acknowledged bitterly rising bitcoin prices in the past year, but also pointed out that its high risk, not a good investment choice, the gold is still unshakeable advantage. At the same time, the group also said that cryptocurrencies could have a tremendous impact on the banking system, subverting the central bank’s leadership in the financial sector and praising the role of blockchain technology, admitting that the gold market participants are also exploring the technology.n
nTranslation: Inan
In its January 2018 investment report, the World Gold Council pointed out that although the price of gold achieved a significant 13% rise in 2017, the value of Bitcoin has increased 13 times.n
However, the group also pointed out that gold is a better investment choice and that the risk of cryptocurrency is too high.n
n”Cryptocurrencies may be part of the financial system, but gold, in our view, is very different from cryptocurrencies, because gold: less volatility; more liquid markets; trading within established regulatory frameworks; investing in There is a definite role in the portfolio, which differs from cryptocurrencies in many aspects, such as supply and demand. “n
nAt the time of the release of the report, there was a clear rebound in the price of bitcoin, which was caused by the stringent regulatory measures in South Korea.n
It is noteworthy that the World Gold Council has declared that its goal is “to stimulate and sustain the demand for gold, provide industry leadership and become the gold authority of the global gold market,” so it is unlikely that Bitcoin will be considered viable investment.n
In particular, the World Gold Council pointed out that the price of bitcoin fluctuates by an average of 5 percentage points per day, saying the situation “is not in line with the characteristics of the currency and does not even amount to a stored-value asset” and is therefore suitable only for “investors seeking high returns.”n
The report also said that as a result of unexpected regulatory measures in some countries making bitcoin a dangerous investment, it also pointed out that the major cryptocurrency has a disruptive effect on the existing banking system.n
n”Monetary policy is an important tool for today’s central bank.If people choose to trade in cryptocurrencies rather than legal currencies may undermine the role of monetary policy and undermine the central bank’s tools for influencing the economy and urge the government to make these Product regulation. “n
nThe group also firmly denied that the price of gold is directly affected by the demand for cryptocurrencies, noting that Bitcoin may suffer “disruptive effects” from other cryptocurrencies.n
Although the World Gold Council does not consider bitcoin a stable investment, it believes the underlying technology behind the cryptocurrency has a bright future and even hopes to turn gold into a “digital asset” in the private chain.n
n”Blockchain technology is a distributed ledger mechanism that supports cryptocurrencies, such as bitcoin, and is truly innovative for a wide range of applications in financial services and other fields. In the gold market, various players are exploring blockchain In the hope of turning gold into ‘digital assets’, tracking the source of gold in the supply chain and increasing the efficiency of post-transaction settlement processes. “n

European Commission members plan to hold high-level round tables on cryptocurrencies

nRunaway Comment: Encrypted currency is now one of the major topics for governments and global organizations. Recently, a member of the European Commission publicly expressed its intention to convene a high-level round table as soon as possible to bring together representatives of the public and private sectors to discuss the impact of cryptocurrencies on central banks and other areas. From his remarks, the EU may take some aggressive supervision over cryptocurrencies, thereby preventing any unlawful conduct related to it.n
nTranslation: Inan
A member of the European Commission plans to assemble a stakeholder meeting in public and private sectors to discuss the implications of cryptocurrencies on central banks.n
Valdis Dombrovskis, deputy head of the Euro-Social Dialogue Department, said at a press conference to be held on ECOFIN on Tuesday by the European Economic and Financial Affairs Committee (ECFIN) that he plans to hold discussions with some officials and representatives of the private sector on cryptocurrencies. It is reported that Dombrovskis pointed out:n
n”In addition to the central bank, cryptocurrencies can also affect many other areas, so I intend to bring together key agencies and the private sector as soon as possible to conduct a roundtable to assess long-term conditions, including current market trends.”n
nSome countries have begun to study the concept of official digital currency, including the central banks of Britain, India and Canada.n
However, people react differently to the central bank’s possible involvement in cryptocurrencies. While some predict that central banks will buy cryptocurrencies to shore up their foreign exchange reserves, others believe that the goal of bankers and cryptocurrencies buyers varies so much that the intersection of central banks and cryptocurrencies should be limited to regulatory action.n
Although the trend of these discussions remains to be seen, the role of Dombrovskis in EU structural reform and regulation of financial markets shows that these discussions may trigger further regulatory action.n
At the press conference, Dombrovskis reiterated the EU’s interest in adopting blockchain technology and revealed that the EU intends to adopt a more proactive regulatory approach to cryptocurrencies to curb “unlawful conduct.”n

The ECB will discuss bitcoin and blockchain with youth

nRunaway Comment: The key issues to be discussed by the ECB’s Third Youth Dialogue include the encryption of currency and blockchain, and the central bank has started a poll on Twitter for this interactive session to proceed smoothly. There has been a huge deal of controversy over the popularity and volatility of bitcoin, with regulatory oversight around the world a key issue pending and the use of bitcoin in the European payments arena, with Visa debit cards that support Bitcoin being canceled in Europe. Therefore, this conference will exert force on these major issues. The conference’s outcome will surely receive much attention on the impact of existing payment processors and traditional banks.n
nTranslation: Annie_Xun
On February 12, 2018, the ECB President will answer three key questions through a series of videos, including cryptocurrencies and blockchain.n
Mario Draghi will answer the selected questions, including whether Bitcoin can become a substitute for traditional currencies, and evaluate the central bank’s technical perspectives that may be concluded on January 23, 2018. European citizens ages 16 to 35 can also raise questions around three main themes: the possibility of a new global economic crisis, cryptocurrencies and the blockchain, economic recovery in Europe and youth employment.n
The agenda is the third of the European Central Bank’s Youth Dialogue, where youth policy makers often engage in several rounds of dialogue with students and young people of all nationalities and backgrounds.n
To get the conversation out, the ECB has launched a poll on Twitter to see if bitcoin can be a viable alternative to traditional currency. Within 24 hours, polls have received more than 15,500 feedbacks.n
Central Bank with cryptocurrencyn
Although the central bank’s role in digital money has been the focus of debate, the idea that their presence helps ensure economic stability has always been the case.n
Bitcoin volatility has led Lloyd Blankfein, chief investment banker at Goldman Sachs in the US, to criticize it as a tool for fraud, and Luxembourg Finance Minister Pierre Gramegna also pointed out that the EU may soon create new cryptocurrency regulations.n
Adopt the trendn
Sure, 2017 is a crucial year for bitcoin. This year, bitcoin’s global popularity soared with its value, and the cryptocurrency ecosystem gained mainstream media attention.n
Although there is no evidence that such concerns have increased adoption in Europe, the 2017 statistics show that it is still under-utilized as a routine payment method in major European economies.n
Encrypted currency question and answer session for youth dialoguen
However, it is clear that new information in the public domain has affected many people’s perspectives. This will give the ECB some interesting questions and answers, even though perhaps no new focus will emerge.n
The question and answer session was affected by the recent cancellation of Bitcoin Visa debit cards in Europe and the European Union’s regulation of the currency. Worthy of consideration is what the outcome of the discussions at this meeting will mean for countries that are discussing alternative card issuers in Europe and are trying to create a cryptocurrency / legal bank independent of traditional banks.n

Bank of Korea set up a working group to study cryptocurrency

nRunaway Comment: The Bank of Korea recently announced the establishment of a new working group to study the effects of cryptocurrencies on traditional finance. In connection with the recent investigation by the financial regulator of South Korea of ​​six major local banks in cryptocurrencies, it is easy to see that South Korea is doing its utmost to bring the cryptocurrency market under management. At the same time, the South Korean government seems aware of the need to learn more about cryptocurrencies to work out the most appropriate management guidelines.n
nTranslation: Inan
The Bank of Korea has set up a cryptocurrency working group to study the technology’s impact on the financial system.n
According to local news Pulse News, the bank said the group will be composed of staff from eight departments, including financial stability and monetary policy agencies, who will study the impact of digital currencies.n
The new organization will be led by Shin Ho-soon, deputy governor of the Bank of Korea, which will manage and assist with it. The Bank of Korea also seeks to explore the digital currency backed by the central bank, which is also part of the project.n
Before the announcement, South Korea has started to worry about the possible impact of a spike in cryptocurrencies on traditional financial systems.n
Earlier this week, the FIU and FSS have started a survey of six banks to clarify their relationship with the ecosystem of Bitcoin transactions in South Korea. The two regulators said the move aims to see whether these banks comply with anti-money-laundering rules when trading with cryptocurrencies.n
The South Korean government said last month it will be more regulation of the exchange, may include the ban on anonymous transactions. Recent reports indicate that the South Korean government is pushing for moves against the local Bitcoin exchange.n