Technology is moving faster than regulation in crypto, according to BPI’s Carstens

The general director of Bank for International Settlements (BIS)the Mexican Agustín Carstens, recognizes that the development of cryptocurrencies has anticipated the regulatory capacity of the financial system and emphasizes restricting them to protect the consumer and preserve financial stability.

“It must be recognized that this innovation has not waited for the regulatory and supervisory framework. “We are learning a lot from what is being developed out there, there is a lot that is usable, but there are also other things that, in the absence of regulation and supervision, are practices that should be canceled,” Carstens points out in an interview with EFE that he has been warning for years about the risk of cryptocurrencies without official support.

This is one of the reasons why an innovation center has been created within the BIS “with our eyes on technological developments that may have an impact on the financial system and identifying those that could be very useful to incorporate them sooner.”

“In banking and at the BIS we had economists and lawyers, but we realized that we need a different mix of skills to assimilate and anticipate technological developments,” he says, referring to the increasing presence of computer scientists in the financial field.

Regarding stable cryptocurrencies -those backed by one or several safe assets-, Carstens believes that in the future, when central banks issue their own digital currencies, it will not make much sense to operate with a currency that needs to be guaranteed by another.

“Stable coins facilitate programmability that central banking and commercial banking money does not allow. That ‘right now’ has a certain place, but it makes no sense to depend in the future on money that needs support from another.”he asserts.

In this sense, Carstens is in favor of central banks issuing digital currency (CDBC), because it will allow instant transactions.

“Society demands immediacy, everything has to be immediate, but there are still many financial transactions that take a long time,” says the general director of the BIS, who gives as examples international transfers that take several days or the procedures to establish a mortgage that can take months.

Technology, key to financial inclusion in Latin America

Carstens assures that to close the financial inclusion gap that Latin America suffers, the region must be provided with a new technological base that makes banking services cheaper and speeds up transactions.

To this end, it has joined forces with the Inter-American Development Bank (IDB), with which it has recently signed in the Spanish city of Santiago de Compostela a first agreement to promote open source technology that will make faster and more inclusive payment systems possible, and to respond to the technical needs of the central banks of Latin America and the Caribbean.

“It is about all countries becoming interconnected in a more agile way, moving information securely. “All of this directly benefits the population,” highlights Carstens, who explains that the role of the BIS is to “innovation facilitator”.

This new architecture of the financial system will make it possible to lower the cost of sending remittances or facilitate access to credit, among other things.

“Everything is designed so that they are immediate transactions and that will give much more certainty,” it states.

Technological innovation will also be crucial in the field of sustainable finance, when it comes to certifying investments in green projects more quickly or systematizing the viability of credit linked to certain projects with risks associated with climate change.