RBA Governor Says Cryptos Won’t Break Down the Financial System

The governor of the Reserve Bank of Australia (RBA), Philip Lowe, has addressed the fuss with cryptocurrencies like Bitcoin, saying they cannot bring down the financial system. However, financial regulators would need to pay closer attention to digital currencies like the Facebook-planned Diem (formerly Libra) stablecoin.

Besides the governor’s statement, one of the RBA executives added that they will still need to combat money laundering and terrorism financing issues with Bitcoin and other digital currencies.

Cryptos are not a risk to financial systems

As reported by the Canberra Times on Friday, the RBA governor Philip Lowe told parliament’s economics committee that digital currencies don’t pose risks to the financial system. “It’s not a financial stability risk,” Lowe said. However, any investor dealing with cryptocurrencies like Bitcoin should be wary of the volatility.

Rather than undermining the financial system, the volatility of digital currencies can be “a risk to investors,” Lowe told the committee.

“There’s a lot of fuss over Bitcoin – it’s not a payment instrument, and it’s not really money,” said Michele Bullock, the assistant governor at the Reserve Bank of Australia. “The issue that gets much more airplay recently is stable coins.” Following the case with the Facebook-planned stablecoin, Ms. Bullock added that regulators would need to pay more attention to them.

“With those sorts of ‘coins,’ as they’re so-called at the moment, nothing will happen until the regulators are happy,” Ms. Bullock said.

The Main Concern with Crypto

Although the Australian central bank doesn’t see cryptocurrency as being risky to the financial system, Ms. Bullock did mention that they would still need to address certain concerns with cryptocurrencies. These include privacy, consumer protections, and illicit activities with cryptocurrencies like money laundering.

Owning to the inherent privacy property with digital currencies, criminals are switching to using cryptocurrency to launder ill-gotten profits.