Economic Policy, Regulation, and Cryptocurrencies

Almost 15 years after the emergence of Bitcoin, it is possible to draw an initial balance of the impact of cryptocurrencies on the global financial and monetary system. The aim of this contribution is to analyze the evolution of the monetary functions performed by these instruments, the regulatory and financial stability challenges they pose, and the response adopted by central banks. Cryptocurrencies are aimed at building decentralized monetary systems. However, history shows that revolutionary movements claiming decentralization often end up leading to more centralized systems. Currently, on the one hand, we observe a process whereby central banks are internalizing technological innovations introduced by cryptocurrencies through the issuance of central bank digital currencies (CBDCs). On the other hand, Bitcoin is exhibiting levels of centralization of money production and distribution that are in stark contrast to its original goals. Meanwhile, regulators try to keep up with private monetary innovations but find themselves one step behind.