The governor stated that he believes these technologies have the ability to democratize finance and empower individuals with greater financial power and control. “In general, that is a worthy goal,” he added, noting that this was also the intent and purpose of the introduction of private digital currencies that do not require financial intermediation.
Cryptocurrencies’ Potential Risks Outweigh its Benefits: Governor SBP
Dr. Baqir thinks that private digital currencies in their existing form are primarily speculative. “In Pakistan, the central bank has concluded that, for us and in terms of the central bank’s main objectives, the potential risks outweigh the benefits,” he said. Numerous significant growing markets, including China, India, and Russia, have come to a similar conclusion. Simultaneously, he noted, numerous sophisticated economies have taken a more permissive stance toward such virtual currencies. Explaining the risks associated with cryptocurrencies, he stated that in their current form, private digital currencies are largely speculative in nature and have yet to demonstrate a viable use case or tangible economic benefits, particularly for developing nations such as Pakistan. “Because of their speculative nature, rapid price volatility, and, most significantly, their dispersed and decentralized structure,” he said, “they can represent a risk to financial and monetary stability.” Following the 2008 global financial crisis, the globe witnessed the birth of so-called cryptocurrencies, which are based on a new technology called Distributed Ledger Technology (DLT). Check out? UBL Wins SBP Approval For Due Diligence of Telenor Microfinance Bank
