Philip Lowe, the Australian central bank governor, spoke at the G20 official meeting, stating that privately issued digital assets can be beneficial. The reports published by Reuters reveal that Philip Lowe was having a conversation regarding consumer-focused digital assets at the online streamed meeting.
Lowe stated that privately issued consumer-focused digital assets could be better than the tokens issued by the central banks if they could be properly regulated. A similar voice was raised during the meeting where the chief of the Hong Kong Monetary Authority stated that better regulation of private tokens could potentially reduce the risks associated with DeFi projects.
Rise in stablecoins paved way for CBDCs
As there was a rise in stablecoin developments in the crypto realm, governments began proposing ideas to develop central bank digital currencies. The real scrutiny began for stablecoins with the fall of TerraUSD and its whole ecosystem.
“If these tokens are going to be used widely by the community they are going to need to be backed by the state, or regulated just as we regulate bank deposits,” Lowe.
He also stated that, unlike central bank innovations, private entities are better at bringing in better solutions and innovations. The discussions at the meeting also stated that there is much more work to be done in order to create a robust regulatory system for digital assets.
The catastrophic fall of TerraUSD and the prolonged bear market that witnessed several firms struggling to stay robust have increased the necessity for a regulatory framework. A unified framework is also necessary to mitigate the risk and protect the funds of the users.
Even through the bear market and struggling market conditions, crypto and its underlying technology will prosper, stated HKMA CEO, Eddie Yue. The crypto market seems to have slowly resurrected as the whole market is trading in green.