Virtual currency: the Central Bank’s Perspective

Jacek Karwowski

Abstract

Cryptocurrencies are financial and social phenomenon. The Bitcoin, for example, has several characteristics, which make it alternative money. The number of Bitcoins is limited (by design) to 21 million. In this respect Bitcoin is similar to gold. In addition, it is extremely easy to transfer Bitcoins between any locations in the world, at high speed and at very low cost. This paper looks at Bitcoin from the central bank’s perspective. Taking into consideration central bank’s goals and functions, possible consequences of Bitcoin usage are discussed. It is shown, that any purchase of Bitcoins in no way could increase inflation. To the contrary, it may tend to support deflation. What concerns financial stability: Bitcoin does not yet have the scale to act as a systemic contagion of instability or lapse in network integrity. But the real problem could be substantial involvement of financial institutions in cryptocurrencies. From a central bank’s perspective this might be quite dangerous and should be limited by law. If Bitcoin begins to undermine the financial and tax systems they will be shut down and all contracts between traders would be unenforceable.
Author Jacek Karwowski (ES / DF)
Jacek Karwowski,,
- Department of Finance
Pages848-857
Publication size in sheets0.5
Book Soliman Khalid S. (eds.): Vision 2020: Sustainable Economic Development and Application of Innovation Management from Regional expansion to Global Growth. Proceedings of the 32nd International Business Information Management Association Conference (IBIMA), 2018, International Business Information Management Association (IBIMA), ISBN 9780999855119, 8422 p.
Soliman_Vision_2020_Sustainable_Economic_Development.pdf / No licence information (file archived - login or check accessibility on faculty)
32nd IBIMA Conference proceedings - Part 9 of 9.pdf / No licence information (file archived - login or check accessibility on faculty)
Keywords in Englishvirtual currency, central bank, Bitcoin, cryptocurrency
Languageen angielski
Score (nominal)70
Score sourceconferenceList
ScoreMinisterial score = 70.0, 17-01-2020, ChapterFromConference
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