A new report about cryptocurrencies and its possible effect on central banking has been published recently at the request of the European Parliament’s Committee on Economic and Monetary Affairs, and its conclusions are very interesting. The report called “Virtual currencies and central banks monetary policy: challenges ahead”, tries to give an integral insight into what cryptocurrencies have come to be and what might be of them in the future.
The authors of the report, Marek Dabrowski and Lukasz Janikowski, both scholars in the field of economics and members of CASE (Center for Social and Economic Research), an independent economic research organization located in Warsaw examined the current state of the cryptocurrency market and cryptocurrency usage, and came to logical conclusions about it.
They concluded that economists and investors that refer to this instruments as other than convenient new forms of money are wrong; more so, they actually recognize the convenience of using distributed ledger technology as a way of making fast, decentralized transactions. About all this, the report states:
“…ECONOMISTS WHO ATTEMPT TO DISMISS THE JUSTIFICATIONS FOR AND IMPORTANCE OF VCS, CONSIDERING THEM AS THE INVENTIONS OF “QUACKS AND CRANKS” (SKIDELSKY, 2018), A NEW INCARNATION OF MONETARY UTOPIA OR MANIA (SHILLER, 2018), FRAUD, OR SIMPLY AS A CONVENIENT INSTRUMENT FOR MONEY LAUNDERING, ARE MISTAKEN”
They also recommend no to ban these instruments, because due to their global characteristic any attempt to do so would not be effective. There are many ways to trade and use cryptocurrency and trying to prohibit their use would not work as intended. Instead, they advise to issue regulations for their use and also for their trade as investment instruments; as many countries are doing right now.
And while they state that cryptocurrencies pose no real threat currently to the central bank fiduciary system used actually, they still recognize cases of use like the Venezuela case, where people buys cryptocurrencies to preserve their savings due to the failure of their currency. They conclude that cryptocurrencies are here to stay, at least for a while. The whole report can be read here.