Phillip Lowe believes that dealing with cryptocurrencies that can be mitigated by strict regulations is risky, but the technology should be created by private companies. Philip Lowe, Governor of the Reserve Bank of Australia, said private cryptocurrency solutions are “better” as long as regulations mitigate risk.
Rowe was speaking at the recent G20 financial conference in Indonesia. Reuters reported on July 17 that officials from other countries are discussing the impact of Stablecoin and decentralized finance (DeFi) on the global financial system.
Recent risks associated with Stablecoin can be primarily due to depegging events. In May, the Terra USD Stablecoin UST was subsequently converted to the Terra Classic USD (USTC), losing pegs and depressing the value of the entire Terra Classic ecosystem. It caused a multi-billion dollar cascading effect, with Tether (USDT) and DEI Stablecoin temporarily depegging.
Rowe suggested that even strict regulations and government support could help mitigate risks to the public.
“If these tokens are widely used in the community, they will need government support or regulation to regulate bank deposits.”
Regulations will come from the government, but Rowe said it would be best if the technology was developed by the private sector. In his view, private companies are “better than central banks in innovating” the best cryptocurrency features. “It’s likely that it will cost a lot of money for a central bank to set up a digital token scheme,” he added.
The National Federation of Insurance Credit Unions wrote in a letter to the U.S. Department of Commerce on July 8 that Rowe’s skepticism about issuing digital tokens at central banks due to the high cost. I shared.
However, his view on the cost of the central bank’s digital token scheme is not shared in countries that are currently developing or experimenting with the central bank’s digital currency (CBDC), such as China, the European Union and Bahamas.
At the same G20 meeting, Eddie Yue, CEO of the Hong Kong Monetary Authority, upheld Lowe’s view that Stablecoin is worth further scrutiny. He said reliable Stablecoin reduces the risk of DeFi, where Stablecoin functions as the primary trading currency. “The technological and business innovations behind these developments are likely to be important to the financial system of the future,” Yue said of DeFi and Stablecoin.
