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April 07, 2018, 07:33:03 AM |
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Central-bank-backed cryptocurrencies would be ironic indeed, given that Bitcoin was created as a way to circumvent the need for banks. Beyond that, the idea raises complicated questions about how such systems should be designed, built, and maintained, as well as how they could affect a country’s—or the entire planet’s—financial stability. That’s why Riksbank is hedging its bets, investigating not only distributed-ledger technology—which it describes as unproven but “progressing incredibly rapidly”—but also traditional, centralized accounting methods for its “ e-krona ” (pdf) project. Some economists have argued (pdf) in recent years that a cryptocurrency tied to central-bank-backed money could give governments a way to issue digital tokens that are a lot like cash. Users of such a “FedCoin” would enjoy the level of anonymity that Bitcoin provides, goes the theory, while being protected against the volatility that has plagued cryptocurrencies. Many countries’ central banks are investigating this idea, but Sweden looks to be the furthest along. But a cryptocurrency that’s available to all consumers “opens up a whole host of issues” and would pose new challenges for makers of monetary policy, says Rod Garratt, an economics professor at the University of California, Santa Barbara.
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