Phillip Lowe noted that the crypto technology technology would be best if it were developed by the private sector

Australian central bank Governor Phillip Lowe said that a private solution “is going to be better” for cryptocurrency as long as risks are moderated through regulation. He claims at a recent G20 finance meeting in Indonesia that there are risks in dealing with cryptocurrency that can be alleviated by strong regulations, but the tech should be made by private companies.

In the July 17 report of Reuters, it is stated that officials from other countries discussed the impact of stablecoins and decentralized finance (DeFi) on global financial systems.

Current risks allied with stablecoins can largely be marked up to depegging events. The Terra USD stablecoin UST, which has since changed to Terra Classic USD (USTC), lost its peg and drove down the value of the entire Terra Classic ecosystem in May. It instigated a multi-dollar cascade effect leading to Tether (USDT) and the DEI stablecoin briefly depegging.

Lowe recommended that strong regulations or even state backing could help alleviate the risks to the public.

“If these tokens are going to be used widely by the community, they are going to need to be backed by the state or regulated just as we regulate bank deposits.”

Lowe noted that the technology would be best if it were developed by the private sector, though the regulations would come from the government side. He thinks, private companies are “better than the central bank at innovating” the best features for cryptocurrency.

He also added, “there are also likely to be very significant costs for the central bank setting up a digital token system.”

According to Cointelegraph, the National Association of Federally-Insured Credit Unions shared Lowe’s skepticism about employing a digital token at central banks due to high costs in a letter to the U.S. Commerce Department.

Though, his view on the costs of digital token systems at central banks is not boomed by the countries presently developing or trying central bank digital currencies (CBDC), such as China, the European Union, and the Bahamas.

Hong Kong Monetary Authority CEO Eddie Yue backed Lowe’s opinion in the same G20 meeting, that stablecoins should be scrutinized more closely. He said that reliable stablecoins would, in turn, reduce risks in DeFi, where stablecoins act as the main transactional currency.

Related: Aussie FPA supports ‘crypto rule book’ and regulation of exchanges

Referring to DeFi and stablecoins, Yue said, “the technology and the business innovation behind these developments are likely to be important for our future financial system.”