TRANSPARENCYThe current thinking with regard to a Central Bank Issued cryptocurrency is to have the
fiat money equivalent presented in a token or crypto-currency form and used to distribute and record value at the wholesale rather than retail level.In other words, central banks are exploring the possibility of leveraging on the advanced record-keeping systems and transparency of blockchain in as far as keeping track of the value it creates and distributes to the commercial banks.
Using tools to study questions of monetary policy conceived to deal with one currency, we have successfully re-purposed these tools to expose a more complex problem of understanding the relationship between N-FAD supply,
fiat money supply, and general inflation.
laissez-faire monetary regime in one area and
fiat money in the other.
So far, not a single cryptocurrency has been declared as
fiat money. However, protagonists of cryptocurrencies are of the view that, in future, real money will be replaced by cryptocurrencies.
Debt is the broken reed upon which the modern
fiat money systems lean.
But if Bitcoin is going to replace
fiat money, its market value will have to reach into the tens of trillions of dollars -- more than 100 times higher than anything it has attained so far.
Further variations of the model, including a single
fiat money and multiple versions of bitcoin, are discussed but not fully explored.
Our economies and financial systems are built around
fiat money, and they rely on the central bank's control of the currency (and the government's ability to issue debt in that currency) to help manage the business cycle, fight unemployment, and deal with financial crises.
944 last February, 2017 requiring businesses to register as remittance and transfer companies with the BSP if they are engaged in the exchange of cryptocurrency for
fiat money. This was followed by a strong public warning and tips on how to carefully assess dealings in cryptocurrency.
The key point is that they must know what they are in,' he said, adding that BNM did not recognise the cryptocurrency as the
fiat money.
(1) Others claim it is a (private)
fiat money (e.g., Velde 2013; Sieron 2013).
But so, too, is the idea that even a single cryptocurrency could substitute for
fiat money. Cryptocurrencies have no intrinsic value, whereas fiat currencies certainly do, because they can be used to pay taxes.