UBS' Axel Weber is urging central banks to create digital versions of their currencies. The comments are remarkable because the chairman of the Swiss bank was once in line to run the European Central Bank.
Central banks should consider setting up their own digital currencies, UBS chairman and former Bundesbank head Axel Weber told the Financial Times (behind paywall) in an interview.
«Whilst the official sector very often looks at the risks of these new means of payment, the private sector tends to look at the opportunities they offer,» says Weber, who was the front-runner to head the European Central Bank before he left Germany's Bundesbank six years ago.
The influential European banker's comments come shortly after his CEO Sergio Ermotti said that the wealthy are curious about digital currencies, which represent a threat to the traditional banking system, but unwilling to take big crypto bets.
Blockchain? Yes! Coins? No!
UBS' wider private banking arm also is yet to be convinced, warning of the bitcoin bubble in a recent report on cryptocurrencies written by equity analyst Sundeep Gantori.
The Swiss bank and Weber are proponents of blockchain, but pessimistic for currencies based on the distributed ledger technology. Bitcoin lacks a lender of last resort, Weber argued at an event in London in 2015. Without one, another currency can't take off and there's no escaping the «boom or bust,» he said.
Nevertheless UBS is pushing ahead with its own digital currency. It is working with other banks, including Barclays, Credit Suisse and HSBC, on a utility settlement coin. UBS already has the support of Deutsche Bank, Santander, BNY Mellon and ICAP for its project.
