the article, “Virtual Currencies and
Beyond: Initial Considerations”, (2016) He,D. et al. (2016) discuss the potential
benefits along with considerable risks of virtual currencies (VCs) by analyzing
the definition, distributed ledgers, and regulatory response. According to the
authors, VCs came out as a result of the transformation process of new
technologies as valuable digital representations, while being dispersed through
decentralized ledger system. The authors claim that there are such advantages
in term of transaction time, efficient payment and financial inclusion
promotion. On the other hand, they also contend that VCs are imposing
precariousness for financial regulating and monitoring currencies due to the
scale level as well as the technology’s complexity. The IMF Staff authors also make
some suggestions on principle regarding the improvement of regulation responses.
By using a majority of references from central banks and economic journal, the
IMF Staff evaluate the realistic usage of VCs in the future with pros and cons
in various perspectives.
it is written in the beginning that the article does not “necessarily
represent the views of the IMF, its Executive Board, or IMF management”, the
bias of being against the VCs is still obvious demonstrated as the drawbacks are
more focus on VCs being irreplaceable to traditional ones. The authors from
this article, have tried to stand from the objective side in order to analyze
the potential of VCs, however, they seem to passively oppose the wide
distribution of this new form of currency as it might result in their loss of
benefits as a central bank. Moreover, at a glance at the references that are
used by the authors, part of them come from major central banks’ ones, such as Bank of England
Quarterly Bulletin, Bank for International Settlements or European Central Bank.
Therefore, their viewpoints on VCs consequently remain conservative,
specifically by some negative but weak words in implying the risks
such as “reduce attractiveness”, “remain challenging” and “could be
difficult”. Although the IMF Staff
authors have attempted to discuss the future of VCs in an open-minded way, the
article seems to passively against it from the perspective of a central
institution of monetary.