The head of Chile’s central bank has said he believes a central bank-issued digital currency may be “many years” from coming to fruition.
Mario Marcel, the governor of the Central Bank of Chile, was speaking at an event in the UK on June 29, according to a transcript published by the institution over the weekend. The event was hosted by the Cambridge Centre for Alternative Finance.
During his speech, Marcel touched on the subject of blockchain and distributed ledgers several times, noting that financial sector firms are experimenting with applications and possible commercial uses. Taking a seemingly neutral stand, Marcel laid out potential opportunities of DLT such as increasing market efficiency with lower cost, as well as collateral risks including the cryptocurrency market volatility and the potential for flash crashes.
He also invoked work by institutions such as the Central Bank of Canada and the Bank of England in pursuit of wholly digital currency systems based entirely or in part on blockchain. Canada’s central bank demoed its “CAD-coin” project in April of last year, though it later said that the tech wouldn’t be used in the near-term to replace the country’s wholesale payments service.
Echoing that sentiment, Marcel declared that, in his view, such a digital currency launch is likely to take a long time given the technical challenges as well as the broader cultural shift that would be spurred at central banks worldwide.
“[Central bank digital currencies (CBDC)] seems to lead inevitably to the replacement of the classical role of central banks at the top of a tiered liquidity system to that of a massive retailer, where deposit-taking may soon combine with loan-making,” he told attendees, adding:
“This means that a real CBDC may still be many years away.”
However, Marcel agreed that such technological innovation should not be held back by strict regulations.
“According to the Governor of the Bank of England, Mark Carney, FinTech innovations should not be in the ‘Far West,’ nor be choked at birth,” he concluded.
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