‘Bitcoin Mania’: central banks turn to launch virtual sovereign currencies

The immense attention bitcoin is receiving, whose price has broken the record of $ 2,700, has sparked an intense debate over its uses. As investors turn to this and other digital currencies (known as ‘altcoins’) which, as a whole, reach a market capitalization of more than $ 80 billion, monetary authorities around the world take positions, in many occasions contradictories, on the legal status of these currencies ‘online’.

'Bitcoin Mania': central banks turn to launch virtual sovereign currencies
‘Bitcoin Mania’: central banks turn to launch virtual sovereign currencies

The official treatment of these virtual assets has changed a lot in 2017. In countries where they were banned, such as Russia or Brazil, an ad hoc regulation for online currencies is now being considered. China’s foreign exchange regulator (SAFE) has loosened control it tried to impose at the beginning of the year on the use of bitcoin, to mitigate capital flight and money laundering through exchange houses of the country. But the 180-degree turn in the rules of the game has occurred in another Asian country. It is the definitive step towards its adoption that has given Japan, where the highest body of financial markets has decided to support the use of cryptodivisa among the population and has changed its status to that of legal currency, which has made Japan in the largest “gold market” of virtual currency, with 48% of its volume of transactions.

Thus, much more prudent than the Japanese authorities, although not daring to open the door to the field, some central banks have joined the latest trend in money creation and are considering offering alternatives to decentralized virtual currencies. The fact that a sovereign currency issued by a central bank can circulate electronically would be a major monetary event, so that this currency would have the advantages of bitcoin without its drawbacks, however a thorough study is still much needed.

From there to an implementation of this method of payment that transcends the borders of physical money and ends up by banishing it, either in bitcoins or virtual euros (proposed by the European Central Bank), there is still a long way to go. We are at the dawn of a revolution in which central banks and traditional banks are redefining their position and trying to get on a train that is already going full throttle. Most likely, according to experts, is that a model such as Japan, in which paper money coexists with money, sovereign or not, virtual, will eventually impose itself.

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