The Wall Street Journal | By: Steven Russolillo | September 18, 2017:
BIS report weighs up risks and rewards from virtual currencies’ surging popularity.
Central banks should consider introducing their own cryptocurrencies to counter the risks from the explosive growth in bitcoin and other virtual currencies, the Bank for International Settlements said in a new report.
The 16-page analysis, tucked into a broader quarterly review from the consortium of major central banks, based in Basel, Switzerland, comes as prices of digital currencies have skyrocketed until recently. They fell sharply last week after China started cracking down on domestic trading venues for bitcoin.
The surging popularity of trading in virtual currencies—of which bitcoin is the largest—is creating a dilemma for central banks whose role is to manage their country’s currency and money supply, and maintain stability in the financial system. Soaring cryptocurrency prices have sparked concerns about the pitfalls often associated with speculative trading, and raised the specter of authorities potentially losing control over their monetary systems.
The BIS report, which highlighted what it called “a new taxonomy of money,” discussed the pros and cons of central banks issuing their own digital currencies. It noted the potential for digital currencies’ underlying technology—used to process and record transfers—and the uncertainty related to possible unintended consequences.
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