Dr.Doom, Roubini Calls for CBDCs to Destroy Crypto
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Main page Opinion, Nouriel Roubini, CBDC, Cryptocurrency
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Nov. 21, 2018
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One of the most respected global finance experts in the world, an American pro­fes­sor Nouriel Roubini who teach­es eco­nom­ics at the Stern School of Busi­ness at New York Uni­ver­sity called on Central Banks to release their own centralized cryptocurrency (CBDC).

This call might sound untypical for Roubini, who de­spite being an ex­pert on the global econ­omy, in­ter­na­tional fi­nan­cial mar­kets, asset and credit bub­bles, and their bust, as well as the per­son who has pre­dicted the Global Fi­nan­cial Cri­sis of 2007-2009, is bet­ter known as the Dr. Doom in the crypto com­mu­nity. The nick­name was coined be­cause of the con­stant trolling and crit­i­ciz­ing of crypto and blockchain tech­nol­ogy.

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But when you look deeper, everything is put into its places. Mostly.

In his article published in the influential British newspaper the Guardian, Roubini writes that the world is inexorably moving towards digitalization, and the traditional fiat currency will sooner or later fade in history. In this regard, the economist believes, CBDC will be the most effective solution for the banking system, since digital currencies of central banks also wouldn’t need the “over-hyped” blockchain technology.

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“CBDCs would likely replace all private digital payment systems, regardless of whether they are connected to traditional bank accounts or cryptocurrencies,” he writes.

The only drawback of CBDC that Roubini sees is that they will undermine the existing system of fractional reserves, whereby commercial banks make money by giving out more loans than they hold as liquid deposits, and if all private bank deposits are transferred to CBDC then traditional banks will have to become “loanable funds intermediaries”. This means that the system of partial reserves will be replaced by a system of “narrow” banks (i.e., limited in their activities by holding only safe assets of guaranteed high liquidity), managed mainly by the central bank, and this will, according to Roubini, be a worthy step towards the replacement of the current crisis-prone banking system.

“By transferring payments from private to central banks, a CBDC-based system would be a boon for financial inclusion. Millions of unbanked people would have access to a near-free, efficient payment system through their cell phones,” Roubini added.

Lagarde & IMF Call Central Banks to Consider Own Crypto

Earlier, a similar initiative was made by the managing director of the International Monetary Fund, Christine Lagarde, calling on central banks to "consider the possibility to issue digital currencies.”

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