Australian Central Bank Admires Bitcoin But Doesn’t See it Replacing Fiat

Central banks govern most of the country’s wealth, and thus most are feeling threatened by the exposure cryptocurrency has got in mainstream economics. Australian Central Bank’s opinion about cryptocurrency was stated to the Australian Business Economists in Sydney yesterday, 26th June.

Tony Richards, an official from the Reserve Bank of Australia said,

“Even if one is quite skeptical of whether bitcoin will have a significant role in the economy in the future, I think it is hard to avoid some admiration for its design.”

Tony Richard is the head of Australia’s payment policy department and is known to own a small amount of bitcoin too which he acquired back in June 2014.

“When a country doesn’t have a credible currency, then people might look for other ones. Whether those are cryptocurrencies or something like the US dollar is another issue, but we in Australia have a perfectly credible currency called the Australian dollar; we’ve had low and stable inflation for at least 25 years; and the likelihood that we’d have significant adoption of an alternative currency seems to be pretty low,” he continued.

Tony Richards may be a fan of Bitcoin; however, he notices that Bitcoin won’t have much to do for the people of Australia as they are pretty satisfied using the Australian Dollar.

Richards also touched on the volatility issues of Bitcoin, and claimed that “Bitcoin and other cryptocurrencies are yet to establish themselves as reliable stores of value.”

Richards pointed out the higher transaction fees that undermine the legitimacy of Bitcoin.

Richards proved to the public his knowledge by bringing front more technical issues of Bitcoin by saying,  “This episode points to the scalability and governance problems of the bitcoin system.“Bitcoin’s lack of a central governance structure has been a weakness in dealing with the capacity problem that results from the fact that the original protocol limits the block size to no more than 1 megabyte.”

He even spoke about the numerous security concerns which put Bitcoins and other cryptocurrencies at risk.

“And there have also been many hacks of cryptocurrency exchanges and wallets over the past few years. That shows there is also a lot more risk in bitcoin intermediaries than there is in the supervised banks and financial institutions in which households can hold their Australian dollars.”

He cleared the air that the Australian Central Bank won’t be pursuing their own cryptocurrency.

“So for the time being at least, consideration of a possible new electronic form of money provided by the Reserve Bank to households is not something that we are actively pursuing.”

While Australian Central Bank’s official may not opt for cryptocurrency, the governor of the Bank of England, Mark Carney has shown his interest in a central bank issued digital currency.

Cryptocurrencies will be helpful for most of the unbanked and are seen to hold a valid place in mainstream economics for people who don’t believe in the traditional banking system.

Image Source: “Flickr”

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