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Cryptocurrencies and Monetary Policy
Report

Cryptocurrencies and Monetary Policy

Bruegel, 2018

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Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • Hot Topic

Recommendation

Cryptocurrencies are rapidly gaining popularity, so speculation abounds on whether they will ever supplant cold hard cash. If a virtual currency does push fiat money to the curb, central banks’ monetary policy making could become ineffective. In this incisive analysis, economists Grégory Claeys, Maria Demertzis and Konstantinos Efstathiou take an objective look at the broad scope of the role of money in an economy, and they make a strong case for why cryptocurrencies are unlikely to replace official currencies any time soon. getAbstract recommends this useful primer on money and society to investors, financial executives and cryptocurrency enthusiasts. 

Take-Aways

  • To be effective, money must serve as a “unit of account, medium of exchange” and a “store of value.” 
  • Effective currencies share the critical economic characteristics of ensuring “price stability and a sufficiently large network of users.”  
  • Cryptocurrencies fail the test for providing stable value and a large user base.

About the Authors

Grégory ClaeysMaria Demertzis and Konstantinos Efstathiou are economists at Bruegel, a European think tank.