The central banks fear gold and metals generally. They always have as precious metals restrict their power. But a new “villain” is emerging and has been emerging now for years – Bitcoin. (And blockchain transactions.)
I say “Bitcoin” but bitcoin has brothers, Litecoin, Ethereum, to name 2. Together with other alternative digital currencies they present a real challenge to the power of the Fed and company. This challenge will only grow in the future – thankfully.
For the record I remember writing about bitcoin when it was $3/coin but I didn’t have the sense to get some at the time. (It’s currently $2,575/coin.)
According to a newly-published transcript from a speech in late May, Philip Lane, governor of the Central Bank of Ireland, said that the central bank has moved to establish an internal working group focused on financial technology innovation. It’s an approach that other central banks have taken as technologies like blockchain are poised to potentially enhance or replace some of their infrastructure.
But opportunities aside, the tech also presents issues, Lane said during an event hosted by the Banking and Payments Federation of Ireland.
He went on to say:
“…novel innovations in the markets sector, such as distributed ledger and crypto currencies, may present the largest policy challenges given their complexity and novelty. Finally, we note that many Fintech start-ups will have limited regulatory expertise and this may present policy challenges in communicating the scope and requirements of the authorisation regime and the role of the Central Bank.”
Those perceived risks haven’t stopped Ireland’s private sector from testing the tech, however.