Bitcoin Potential For Monetary Policy Sparks Growing Interest Among Central Banks
2024年10月29日 - 10:30AM
NEWSBTC
Bitcoin, the world’s top cryptocurrency, is designed to act as a
money or payment option outside anyone’s control. Using the crypto,
which is decentralized and peer-to-peer, removes the involvement of
third parties, like central banks. This Bitcoin promise has
redefined the financial landscape, helped the unbanked, and
empowered those who want independence. However, the ecosystem has
its share of critics, including central banks. Related Reading:
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Central banks’ role shrinks as the Bitcoin ecosystem grows and its
use cases expand. This prevailing belief is validated by a growing
amount of research from financial institutions and central banks
that assess Bitcoin’s disruptive nature. The ever-increasing
narrative focuses on Bitcoin’s role in promoting inequality and its
potential to disrupt central banks’ policies. The Role Of Bitcoin
In Distributing Wealth One subject of central banks’ studies
highlights Bitcoin’s role in wealth distribution. To help us
understand Bitcoin’s role, we look at two papers published by the
European Central Bank. The first paper, published after the FTX
fiasco in 2022, is titled “Bitcoin’s Last Stand,” which sees the
top crypto as a failed monetary project nearing its end. But in
2024, when Bitcoin hit an all-time high, the same researchers filed
another study, painting Bitcoin positively. The paper argued that
crypto can impact wealth distribution, but only the early holders
get richer. Since Bitcoin or crypto use doesn’t produce a product
or service, the increased wealth of early adopters comes from the
reduced consumption of all other members of society. Does BTC
Disrupt Monetary Policies? Other finance-related researches look at
Bitcoin’s impact on monetary policies. For example, the Minneapolis
Federal Reserve argues that when people can hold and use Bitcoin,
it is difficult for the state to run budget deficits regularly.
Traditionally, the government can just offer bonds in case there’s
a deficit in revenue collection. But governments may only spend
what they usually collect if there’s Bitcoin. The study suggests
two options: one, to ban Bitcoin’s adoption, and two, to tax this
asset. In addition to the Minneapolis paper, an IMF policy paper in
2023 highlighted Bitcoin’s effect on monetary policy. The paper
argues that Bitcoin impacts a state’s policy, and emerging markets
are most vulnerable. As a solution, the researchers recommend
strengthening their monetary policies first before banning Bitcoin.
Related Reading: MicroStrategy Stock Hits All-Time High As Bitcoin
Blazes Past $67,000 Central Banks, Financial Institutions Now Take
Bitcoin Seriously Recent studies and research from central banks
indicate that Bitcoin is redefining finance. While these papers
don’t mirror the ideas and thinking of policymakers at these
institutions, they give us insight into how the industry sees
Bitcoin. Some recent policies, including the IMF 2022 Argentina
bailout recommendations, include a few anti-cryptocurrency
provisions. Bitcoin’s continued popularity is now becoming an
obstacle for many central banks in their efforts to create monetary
policies. One of the main aims of Bitcoin’s supporters is to offer
the public an alternative financing landscape free from the
direction, if not, clutches of banks. Featured image from Dall-E,
chart from TradingView
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