Digital currencies
Grégory Claeys, Maria Demertzis · 2021
Privately issued digital currencies have the capacity to change global payment systems and possibly challenge some official currencies. Arguably cryptocurrencies would not be able to provide liquidity readily in times of crisis as that is not part of their ‘mandate’. This is not unlike the gold standard, where new currency could not be mined in real time and made available to absorb excessive demand. Similarly, deposit guarantees would not be available as a solution in a crypto-financial system. As Claeyset al. have shown the first generation of cryptocurrencies traded in small volumes and therefore never threatened to challenge traditional global currencies, like the euro or the dollar. The second generation of private digital currencies aimed at resolving some of the first generation’s shortcomings. The possibility of a big-scale stablecoin is therefore for the moment not imminent. However, the possibility for future stablecoins to challenge established currencies remains real.