Digital currencies threaten to lose central banks’ control over the cash flow and the consequent loss of tax revenues and commissions for financial media
At a time when the role of cryptocurrencies is increasing in the world, specifically Bitcoin, which has exceeded the value of 50 thousand dollars, many central banks have rushed to consider adopting a new shift in relation to traditional money to keep pace with this development.
There is a fear of converting Bitcoin into an international currency that threatens the status of classical currencies, threatening the role of central banks in making money and controlling and organizing the size of the currency in circulation, and it is known that cryptocurrencies are not subject to any control by governments, central banks or money markets.
The president of the European Central Bank, Christine Lagarde, has called on governments to coordinate binding legislation to legalize dealing with Bitcoin.
In this context, the Moroccan Central Bank (Bank Al-Maghrib) established an institutional committee dedicated to studying the issue of digital currency, analyzing the benefits and risks, and studying the measures to be taken.
Previously, Morocco had banned any dealings or circulation outside of recognized money and considered “transactions in virtual money in violation of the current exchange law in which the work is in force, and the perpetrators are subjected to the penalties and fines stipulated” (according to a communiqué issued by the exchange office earlier).
5 questions related to the topic, Al Jazeera Net asked two experts in international finance and finance: Abu Al-Jawad Kamal, professor of international finance, and Saeed Youssef, professor of finance and corporate economics.
Why are some countries afraid of dealing with cryptocurrencies?
Abu Al-Jawad Kamal, an expert in international finance, says to Al-Jazeera Net that governments can no longer ignore the obsession with virtual currencies, and the issue of regulating them is on the table internationally.
With the use of cryptocurrencies more, Abu Al-Jawad and Professor of Finance and Corporate Economics Saeed Yusef see that the main danger is the absence of consumer protection, due to the lack of regulatory protection and a legal framework to cover losses, as well as the rapid volatility of the digital currency, and the possibility of using it for illegal or criminal purposes. .
Saeed Youssef adds that fear also concerns the loss of control by central banks over the circulation of cash and the consequent loss of tax revenues and commissions for financial media.
What are the pros of being open to cryptocurrencies?
Among the most prominent advantages of digital currencies, according to Saeed Youssef, are bringing new funds and ways to invest, and the link between digital currencies and technological development and the development of data and data banks, considering that trading in digital currencies is a window on the modernization of international finance.
For his part, Abu Al-Jawad identifies the advantages of these cryptocurrencies in:
- Decentralization, as most cryptocurrencies operate in a decentralized manner, depending on their algorithms.
- Irreversible high processing speed, it helps prevent record fraud and system fraud.
- Confidentiality and privacy, it does not need to provide any personal data, to use the system, which allows you to remain anonymous and hide your costs.
- Not sensitive to inflation, cryptocurrencies have a sophisticated mechanism to prevent inflation.
- Cryptocurrencies are open and available to everyone, including people who live in deprived areas where no other financial services are available, and the Internet is sufficient.
What pre-preparations should central banks adopt before allowing digital currencies to trade?
Financial expert Said Youssef believes that the first thing that needs to be provided is a follow-up committee, which is what Morocco is currently doing, considering that the change may be sudden and may be shocking.
Said Youssef explains that Morocco has adopted a committee to follow up on “contactless payments,” noting that central banks globally are changing in order to face the worst, and are preparing the legal basis for tracking and finding solutions to the new form of currencies from the legal, economic and technological side, and working on the formation of the human element.
Abu Al-Jawad Kamal says that Europe will have its sovereign cryptocurrency, the “digital euro”, and intends to provide a digital equivalent of 10% to the euro, explaining that the goal is to follow the user in his daily uses, adding that Europeans, for example, have increasingly turned to digital in their consumption patterns, their savings and their investments.
What will countries lose if they do not catch up with the rapidly expanding global digital currencies?
The two experts confirm that cryptocurrencies are a new technology, which is an entrance to the modernization of the economy, and a large number of people use cryptocurrencies in payments, participation in production and making money from market fluctuations, and cryptocurrencies can become the currency of the future with great potential for development.
Saeed Youssef says that change is moving in the direction of digital internationally and cannot be neglected, considering that emerging countries and those in the process of growth will be forced to catch up.
Saeed Youssef referred to the dollar’s dominance over international currency, and pointed to a new confrontation between China and the United States, and China’s tendency to adopt its own cryptocurrency.
Saeed Youssef assures that the cryptocurrencies secured by central banks that have a legal basis will be more powerful.
Given the development taking place on the digital level in Morocco; Is it allowed to regulate and trade digital currencies?
Abu Al-Jawad Kamal believes that Bitcoin is a wave and everyone wants to benefit from it, indicating that it is a bubble that will not stop growing, but will eventually burst, if it is not accompanied by legislation that makes it possible to secure transactions with it.
For his part, Said Youssef affirms that Morocco’s financial policy is on the path of renewal, and that Morocco is preparing to keep up. He adds that financial analyzes show Morocco’s trend towards adopting the digital dirham in the near future, enhancing electronic means of payment, and reducing the use of cash on the horizon of dispensing with “cash.”