The South African Reserve Bank (SARB) has described the introduction of national cryptocurrencies as ”too risky” for the central bank to consider. The statement has been made during a period of increasing development of national cryptocurrencies on the part of authoritarian governments.
“For the Central Bank to Issue Virtual Currencies or Crypto-Currencies in an Open System Will Be Too Risky” – Francois Grope, Deputy Governor of the South African Reserve Bank
South African Officials National Cryptocurrencies As “Too Risky”
During a recent keynote address in the 2017 Strate GIBS Fintech Innovation Conference, Deputy governor of the South African Hold Bank, Francois Grope, offers described the possibility of developing a national cryptocurrency as “too risky”.
During his address, Grope acknowledged the immense disruptive potential of bitcoin and cryptocurrency, and the transformations that contemporary fintech technologies are driving upon traditional banking processes. “We are witnessing the disruption of monetary services”, Grope stated. “Over the past decade or so, fintech’s attention and publicity offer continued to intensify and increase. It is continuing to usher in completely new ways of banking. Developments in the fintech space are a part of an evolutionary process driven by innovations… Virtual currencies have the potential of becoming widely adopted. However, for the central bank to issue virtual currencies or crypto-currencies in an open system will certainly be too risky for us. This is something that we really need to think about. ”
The statements come at a time of increasing development of national cryptocurrencies and blockchains, particularly on the part of authoritarian governments. In recent months, Belarus, Singapore, Russia, and China have taken significant steps toward the development and issuance of state directed virtual currencies.
Last month, the central bank of Belarus announced the implementation of blockchain technology into its banking sector and unveiled plans for future applications to get blockchain in the nation’s financial system. Belarus’s central standard bank revealed that blockchain technology will initially be used because of the basis of transnational info transfers. “The new mechanism of maintenance of the register of bank guarantees will certainly ensure the mutual access of the economic entities of the states being members of the Eurasian Economic Union [Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia] to the procedures of the government procurements of goods (works, services). ” From there, Belarus intends to utilize blockchain technology as the basis for the issuance of securities and the development of the centrally administered national intelligent contract network. Belarus’s central bank has explicitly stated that it does not intend to make use of the national blockchain for virtual currency transfers.
National Cryptocurrencies Are Increasingly Being Developed by Authoritarian Regimes
South African Officials National Cryptocurrencies Because “Too Risky”
Russia’s deputy Prime Minister has recently stated his support for having a tightly controlled national cryptocurrency – a sentiment that has been echoed by Bank of The USSR representatives. Russia is also exploring the development of centrally administered smart contracts, with authorities officials meeting directly with the co-founder of Ethereum, Vitalik Buterin, earlier this year. China is similarly exploring an array of applications to get state administered distributed ledger technology and has previously partnered with Factom on a project designed to enhance the effectiveness of prospective Chinese smart-city projects. Singapore also successfully completed a trial project in partnership with Deloitte that saw the issuance of Singaporean dollars via distributed ledger technology earlier this year.
The current international climate suggests that distributed ledger technology is highly appealing to authoritarian governments, indicating that we will likely continue to see illiberal regimes continue to develop state administered versions of blockchain technology. This trend is also evidenced by the increasing recognition of cryptocurrency technology among self-proclaimed autonomous entities, with Transnistria, Donetsk, and Orania all seeking to adopt virtual currency technology as a fast solution to underdeveloped and declining economic and governance constructions.
Some liberal states are defying this trend and also moving towards developing centrally administered blockchains, with Estonia recently announcing plans to launch the world’s first government-backed ICO. The majority of liberal nations, however , seem to be taking a cautious approach to cryptocurrency technology, and despite acknowledgment of the potential efficiency savings offered by centrally administered distributed ledger technology, have thus far sought to monitor and regulate private ventures wanting to develop blockchain technology.
Do you think that national cryptocurrencies will end up means for governments to get the efficiency savings of crypto whilst repressing its disruptive potential? Share your thoughts in the comments section below!