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Archive » March 2022 » New risks and regulation of cryptocurrencies

New risks and regulation of cryptocurrencies

Rainer Masera
March 2022 - n. 3
Keywords: Cryptocurrencies, central bank digital currency, distributed ledger system, digital finance regulation, geopolitical systems, international payments
Jel codes: G20, E50, E42

Ccs share some of the characteristics of money, but they lack certain critical features, notably price stability and therefore unit of account and store of value. According to Gresham's Law, they can represent a source of systemic risk, if not appropriately regulated and supervised. More generally, they have acquired a significant role in geopolitical dynamics, notably in respect of global confrontations on the «exorbitant privilege of the dollar». An appropriate tradeoff is needed between: 1. allowing the positive features to develop, believing that market innovations are self-correcting and self-regulating; 2. implementing prudential measures and effective supervision. As this paper indicates, the adoption of an appropriate surveillance framework is possible and necessary. Cbdcs represent an urgent development, preferably in a cooperative international framework.

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