Prospects for Reforming the Money and Financial System

Autor: Paolo Savona
Rok vydání: 2021
Předmět:
Zdroj: Open Economies Review. 33:187-195
ISSN: 1573-708X
0923-7992
DOI: 10.1007/s11079-021-09628-4
Popis: Since 2009, when Bitcoin was invented, a private currency has returned to the world stage, offering the advantages of absolute secrecy to its owner. Imitations soon emerged: they do not have the same characteristics, but incorporate increasingly refined financial technologies that has drawn special attention following the lockdown triggered by the pandemic crisis in 2019. As supply is fixed, the prices of bitcoins spiral upward, as well as the prices of other cryptocurrencies do although to a lesser extent. Platforms for custody and conversion of cryptocurrency are set up, and they expanded their business to grant credit either with their own or others cryptocurrencies and to use them as collateral in derivative contracts. Consistently with Gresham's law bad money starts driving out good money and Central Banks are considering the issue of digital sovereign currencies, but the interests around virtual products and fears for the stability of banks and financial intermediaries are slowing down the decision-making process. Only China is taking advantage of an own digital currency and has prohibited any other digital currency out of its control. The topic is also relevant to geopolitical balances and it triggers more international conflicts. The attempt to include cryptocurrency and cryptoassets into the scope of the existing legislation does not lead to a solution. The suggested solution is twofold: we must reiterate the legal nature of sovereign money and the lack of any protection for crypto-users. Legitimacy by public authorities, which is currently granted, either implicitly or explicitly, should be avoided. Crypto-assets (or STO-Security Tokens) are free to operate, but the decentralized ledgers they use must make information accessible to regulatory and supervisory Authorities, and States must guarantee cybersecurity of digital processes.
Databáze: OpenAIRE
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