At a recent event called G20, the governor of the Australian Central Bank Phillip Lowe stated that privately issued, regulated tokens could be a better alternative to Central Bank Digital Currencies (CBDCs).
- The G20 event includes various financial officials from around the world and the Hong Kong Monetary Authority Chief spoke alongside Lowe stating that regulating privately issued tokens is essential in addressing risks imposed by decentralized finance (DeFi) protocols.
- Lowe believes that “the private solution is going to be better – if we can get the regulatory arrangements right – because the private sector is better than the central bank at innovating and designing features for these tokens, and there are also likely to be very significant costs for the central bank setting up a digital token system.”
- Lowe and the fellow attendants agree that there is a lot of work needed to create a regulatory system strong enough for these tokens, as they are the gateway to DeFi projects – those of which may provide essential technologies worth keeping an eye on for future innovations believes Eddie Yue, the CEO of the Hong Kong Monetary Authority.
- These tokens include stablecoins which work directly against CBDCs and banks alike. Stablecoins work natively within a DeFi protocol and are generally pegged 1:1 with fiat currency, although after the collapse of TerraUSD stablecoins have come under strong scrutiny – this is where the call for stronger regulations comes in.
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