Central banks may convert a portion of their reserves to cryptocurrency, according to the CEO of the largest cryptocurrency wallet provider, Blockchain.info. In a Monday interview for CNBC, Peter Smith said that central banks might start relying on Bitcoin and other cryptocoins as early as 2018. Such a move would give the green light to a wider adoption of cryptocurrencies, suggesting they might become a recognized part of the broader Forex market, which includes fiat money.
“I think this year will be the first year we start to see central banks start to hold digital currencies as part of their balance sheet,” Smith predicted.
Speaking about the likelihood of central banks holding cryptocoins, Smith mentioned Bitcoin and Ethereum. He added that the largest cryptocurrency has become too attractive for banks to ignore. He voiced confidence that at least some monetary authorities will include digital currencies in their balance sheet.
“Bitcoin is already a top 30 currency by supply, and this trend, and pressure to hold digital currency as part of reserves will only accelerate as the price rises,” he said.
Smith added that next year would be an exciting one for the crypto world as central banks would adapt to cryptocurrencies and people would start using the technology behind it.
Currently, central banks hold foreign currencies and gold to make sure they are ready for any potential crises.
Besides bringing cryptocoins into their balance sheets, central banks will start issuing their own cryptocurrencies in 2018, according to Smith.
Some regulators have already unveiled plans to that effect. An example is the Monetary Authority of Singapore (MAS), which plans to issue its own cryptocurrency under Project Ubin.
Elsewhere, the Central Bank of Venezuela is also looking to benefit from cryptocurrencies to solve its economic problems. The country’s president recently announced the launch of a national cryptocurrency backed by oil and other assets.
However, not all central banks are ready to embrace the crypto revolution. European Central Bank president Mario Draghi noted that cryptocurrencies are not "mature" enough for consideration.