Global banks like Goldman Sachs may have to issue their own cryptos sooner than expected now that Facebook announced its plans to launch Libra:
And BIS can help central banks realize these projects with its new innovation hubs. The FI will set up innovation hubs in Basel, Singapore, and Hong Kong aimed at improving the global financial system, per. Moreover, the hubs will provide central banks with insights into technology trends affecting central banking and support them in terms of regulatory requirements and safeguarding financial stability.
And despite it being unclear whether there's consumer demand for cryptos, banks need to launch their own digital currencies soon to stave off big tech. There's no clear evidence yet that there's demand for such currencies, especially since consumers can use conventional e-wallets from banks and fintechs instead of cryptos, so the value-add isn't clear. However, as big tech firms begin encroaching on the space, banks should act now to avoid competitors gaining a dominant position.
More players looking to enter the crypto space will force regulators to up their game. There's already more pressure to regulate the crypto industry thanks to Facebook's announcement that it'll be entering the space with Libra and a wealth of influential partners. However, as central banks and the likes of Goldman Sachs get in on crypto as well, there will be greater need for a clear regulatory environment.
Additionally, FIs need to focus on achieving a network effect for their blockchain projects to be successful. Ais needed to achieve scalability, as it ensures that solutions will reach the clients of a plethora of institutions with large customer bases. Thus, Facebook looking to launch its crypto project with nearly 30 partners will likely increase its chances of success.
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