Cryptocurrency: Central banks under pressure to create digital currency
Central Banks across the globe are under pressure to issue sovereign digital currency, as a result of the rise in value and acceptability of Cryptocurrencies as well as investors quest for alternative places to put their money.
This was disclosed during the February edition of the Finance Correspondents Association of Nigeria (FICAN) on Tuesday by Tope Fasua, an Economist and Chief Executive Officer, Global Analystics, in Lagos.
He said though no banker to the government will support Cryptocurrency, they have no option than to begin to issue their own Central Bank Digital Currency (CBDCs).
Fasua said China, Ecuador, Senegal, Tunisia and Singapore have issued digital currencies, not Cryptocurency, and bankers know that they are done if cryptocurrencies really take off and replaces traditional currencies.
According to him, a number of bankers have invested in cryptos just to hedge their bet. But the traditional financial system is deeply rooted, organized and backed by government, unlike the Cryptocurrency mining space.
Fasua while speaking on the topic: “Ban on Cryptocurrency-related accounts in Nigeria and concerns of global central banking,” stated that the proponents of the cryptocurrency believe that there is a need to push back and do something different, that will mimic the attributes of a gold-backed currency in view of durability and scarcity, but better than the current system by being smart, secure and not possible for central banks to issue at will.
“If it started as a rebellion (which is the case), then you must think of the incentive for the global economy to sign on to that rebellion with you against the devil they know. This then means that until there is global acceptance of the currencies, it will continue to be easy to create panic in the crypto world and big players can dump the currency when they have achieved gains.
“It then becomes worse than the stock market because, for cryptocurrencies, the fundamentals are non-existent apart from an analysis of how many are adopting the currency and who is winning between an established traditional banking system and the new kids on the block.”
Cryptocurrency is heading to global single currency but one major challenge is that there is a lot of loses in it and that when most coiners die, no one is able to access their investments which ab initio are encrypted with passwords, passphrases and whatnot.
Fasua said, “People don’t usually plan to die. Now, this is where regulation helps in the financial markets. Apart from deposit insurance, which kicks in, in the event of the collapse of an insured and regulated financial institution, the relations of a dead account holder in a traditional bank could still have access to their balances.”