The blockchain technology underlying Bitcoin and other cryptocurrencies is attracting growing interest. This column argues that if transactions facilitated by this technology become pervasive, it will have implications for the conduct (and success) of central bank monetary policy. Central banks should embrace the technologies that underpin cryptocurrencies, or risk being cut out from intermediation and surveillance and also risk payment service providers moving to other currency areas with an institutional environment that is more appealing for buyers and sellers.
By Dirk Niepelt*
While excitement about Bitcoin appears to have subsided, the blockchain technology underlying Bitcoin and other cryptocurrencies is attracting growing interest (e.g. Oliver Wyman 2016). Central banks have joined the FinTechs and bricks-and-mortar financial institutions in paying attention (Economist 2016). Not a week passes without a monetary authority declaring interest in the technology, and in opportunities to employ it. What are the likely implications of this for central banks and the monetary system?
http://www.eurasiareview.com/21102016-central-banking-and-bitcoin-not-yet-a-threat-analysis/
