Central banks are rushing into digital currencies without considering how the risks might outweigh any benefits, The Wall Street Journal said in its influential “Heard on the Street” column.
- The column, which is widely read on Wall Street and beyond, noted a survey by the Bank for International Settlements earlier this year that found one-fifth of central banks will likely issue some form of digital currency in the next six years. This rush might lead to some serious problems, the WSJ column said.
- Substantial risks to bank funding and financial stability should be weighed against trying to solve problems such as declining cash payments with a totally new, untested system instead of just trying to fix the existing structure.
- Why, the column asks, create digital currencies to address the shift to digital payments when mobile apps and cards are already filling that need?
- Digital currencies, with their security and anonymity, would make putting money in banks via deposits less attractive. This would reduce banks' most stable source of funding, leaving them much more vulnerable, the WSJ column said.
- The only real benefit for digital currencies is security and privacy, and even that is against the interests of countries as it undermines their attempts to fight money laundering, according to the publication.