Contrary to crypto enthusiasts’ belief of cryptocurrencies such as Bitcoin and others being a likely safe haven asset, the majority central banks globally have noted that cryptocurrencies will not displace gold as a safe haven. According to the 27th Annual Reserve Management Seminar survey of nearly 30 central banks conducted by Swiss investment bank UBS during April-June 2021, 84 per cent respondents said they don’t believe that cryptocurrencies will displace gold as a safe haven.
“Gold as an asset class is older than the formal banking system and is rooted deep into the operations of some of the largest banks of the world. We can’t expect banks to comment against gold as their major position is in the yellow metal,” Shivam Thakral, CEO, BuyUcoin told Financial Express Online.
However, Apifiny’s Chief Technical Officer and former VP of Program Trading at Morgan Stanley Ashu Swami had told financial news portal Finance Magnates in November last year that while “there is no perfect safe-haven or store-of-value (SoV) asset,” Bitcoin “has its unique place in the basket of SoV assets and nothing can replace it. “Bitcoin has emerged as the safe-haven of the last resort. Just like gold, bitcoin derives its value from the scarcity of supply,” Swami had noted.
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Nonetheless, cryptocurrencies as an asset class are fairly new and banks are still sitting on the fence when it comes to accepting crypto as an asset class at the cost of gold. “So as a part of their risk management strategy, crypto as an asset class will be present as a discreet offering within the central bank ecosystem for few years,” Thakral added.
Among the biggest motivations for central banks to invest in cryptocurrencies like Bitcoin ahead was the learning process itself of investing and managing them. The survey cited 83 per cent respondents saying that learning and building up knowledge about crypto investing process and investment management would be the biggest motivation for them to invest in Bitcoin, other coins. But for central banks to introduce their digital currencies, the motivation to improve retail payment systems and the overall wholesale financial architecture (payment, clearing, settlement) were among the top reasons why banks want to introduce digital currencies. Crime and money-laundering prevention and pressure from private projects (including stablecoins and cryptocurrencies) were other key motivations to develop digital currencies.
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