Central banks have no consensus on whether they should allow the private sector to take part in development of payments market or not, Reuters has learned, citing a survey by the Official Monetary and Financial Institutions Forum (OMFIF).
Over half of financial regulators say countries will collaborate with the private sector in developing and running payments systems. Nonetheless, approximately three-quarters of the financial institutions believe it was the state’s role to rule this market rather than ceding control to the private sector.
Bhavin Patel, OMFIF’s Head of Financial Technology, claims it is up to the regulators to determine how they should approach collaboration.
“It is up to the central banks to balance how they approach collaboration — whether it is setting joint projects together ... or if it is more just making sure that what comes to the market is properly regulated," Patel added.
Regulators see a threat in private digital currencies like Facebook's Libra that might pose a threat to the future of money. iHodl previously reported that Fabio Panetta, ECB board member, said that stablecoin users are likely "to bear higher credit, market and liquidity risks, and the stablecoins themselves are vulnerable to runs, with potentially systemic implications."
US legislators are also tightening the regulation of the cryptocurrency market as they have introduced a bill in the Congress that if passed will require stablecoins issuers to receive bank charters before they can issue the assets. The bill, which has 18 pages in total, stipulates stablecoins issuers must receive a bank charter, approval from the Federal Reserve, approval from the Federal Deposit Insurance Corporation as well as from the bank regulator in order to issue stablecoins.
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