Markus K Brunnermeier, Joseph Abadi, 17 July 2018

Cryptocurrencies and the underlying distributed ledger technology have exploded into public consciousness over the last few years, with devotees insisting that the technology will revolutionise financial transactions and ownership data. This column identifies a ‘blockchain trilemma’ whereby no ledger can fully satisfy the three desirable properties of decentralisation, correctness, and cost-efficiency. It further explains how distributed ledgers enhance competition but introduce costs above and beyond the well-known electricity costs.

Michael Casey, Jonah Crane, Gary Gensler, Simon Johnson, Neha Narula, 16 July 2018

The idea of a new software system that powers a consensus-driven form of shared record keeping has already had a profound effect, encouraging rapid and substantial investment in what is now commonly referred to as blockchain technology. This column introduces the latest Geneva Report on the World Economy, which assesses the available evidence and likely impact for this technology across a wide range of applications and explores the potential use cases for the financial sector, and the ways in which the organisation of these activities may change over time.

Lin William Cong, Zhiguo He, 05 July 2018

Blockchain technology provides decentralised consensus, which potentially enlarges the contracting space using tamper-proof smart contracts. But this implies distributed information. The column argues that there is a tension between these two features of blockchain. While complete contracts may increase competition, distributed information may also make collusion between incumbents more effective. 

Jon Danielsson, 15 June 2018

Are cryptocurrencies the future of money, Ponzi schemes, speculators’ dreams, or just a prosperity gospel? While there is money to be made in the short run, this column argues that cryptocurrencies are lousy investments and will eventually reach a price of zero.

Peter Bofinger, 12 June 2018

The digitalisation of money has the potential to change traditional structures of the financial system. This column discusses four areas in which it may have an impact, and argues that while digitalisation will not erode the importance of central banks, banks could be massively challenged by new forms of intermediation. 

Jon Danielsson, 01 June 2018

Beat Weber, 21 May 2018

On 10 June 2018, Switzerland will be the first country to have a referendum on the introduction of Sovereign Money ('Vollgeld'). This column argues that the Vollgeld project and cryptocurrencies such as Bitcoin build on popular fantasies about money that are disconnected from the actual operation of the current monetary system. Unfortunately, the latter’s features remain underexplored even among economists.

Antonio Fatás, Beatrice Weder di Mauro, 07 May 2018

Economists have been dismissive of cryptocurrencies, but fintech entrepreneurs and enthusiasts continue to see their disruptive potential. This column considers the theoretical and practical arguments on both sides of the debate. Traditional currencies are overwhelmingly superior as forms of money, and cryptocurrencies’ advantage in terms of lax regulation is unlikely to last. There remains, however, ample potential for innovation in payment systems.

Ousmène Jacques Mandeng, Piroska Nagy-Mohacsi, 15 March 2018

Cryptocurrencies have been the subject of recent attacks by official sector representatives, and the G20 finance ministers will consider regulatory proposals at their next meeting in Buenos Aires. This column argues that while cryptocurrencies present certain risks, they also represent an important innovation that promises to enhance choice and efficiency in monetary transactions. A proportionate, risk-based regulatory approach is required to accommodate differential attitudes and experiences and to avoid stifling innovation and competition. This implies having an open debate before sweeping regulatory action.

Jon Danielsson, 13 February 2018

Cryptocurrencies are supposedly a new and superior form of money and investments – the way of the future. The author of this column, however, does not see the point of cryptocurrencies, finding them no better than existing fiat money or good investments.

Wouter den Haan, Martin Ellison, Ethan Ilzetzki, Michael McMahon, Ricardo Reis, 21 December 2017

Cryptocurrencies have been a staple of news headlines in 2017. The latest Centre for Macroeconomics and CEPR survey suggests that the majority of leading European economists do not believe that these currencies are currently a threat to the stability of the financial system, or will be in the next couple of years. A majority of panel members, however, are in favour of greater regulatory oversight, primarily because of concerns that the anonymity and opacity of cryptocurrencies facilitate tax evasion and other criminal activities.

Gur Huberman, Jacob Leshno, Ciamac C. Moallemi, 16 December 2017

Cryptocurrencies have caught the attention of industry, academia, and the public at large. This column analyses an economic model of a cryptocurrency system featuring user-generated transaction fees, focusing on Bitcoin as the leading example. The Bitcoin system requires significant congestion to raise revenue and fund infrastructure or risk collapse in the long term. Moreover, the current design of the system – specifically the processing of large but infrequent blocks of transactions – makes it less efficient at raising revenue.

Michael Bordo, Andrew Levin, 23 September 2017

Central banks across the world are considering sovereign digital currencies. This column argues that these currencies could transform all aspects of the monetary system and facilitate the systematic and transparent conduct of monetary policy. In particular, a central bank digital currency can serve as a practically costless medium of exchange, a secure store of value, and a stable unit of account. To achieve this, the currency would be account based and interest bearing, and the monetary policy framework would target true price stability.

Jesús Fernández-Villaverde, 03 August 2017

If the share of payments made by cryptocurrencies increases, government-issued money will face market competition from private issuers. The column argues that, even if this system could maintain price stability in an economy, the market would not provide the socially optimum amount of money. A government could still, however, maximise social welfare using monetary policy in response to peg the real value of money. The threat of competition from private monies may therefore impose welcome market discipline on any government that issues currency.

Neil Gandal, JT Hamrick, Tyler Moore, Tali Oberman, 22 June 2017

The cryptocurrency Bitcoin has attracted widespread interest, in large part due to wild swings in its valuation. This column considers an earlier rise in the Bitcoin price to investigate what is driving the currency’s price spikes. The 2013 rise was caused by fraudulent trades taking place at the largest Bitcoin currency exchange at the time. This finding has implications for policymakers as they weigh what, if anything, to do about regulating cryptocurrencies in light of the record high Bitcoin valuation that many fear is a bubble.

Dirk Niepelt, 19 October 2016

The blockchain technology underlying Bitcoin and other cryptocurrencies is attracting growing interest. This column argues that if transactions facilitated by this technology become pervasive, it will have implications for the conduct (and success) of central bank monetary policy. Central banks should embrace the technologies that underpin cryptocurrencies, or risk being cut out from intermediation and surveillance and also risk payment service providers moving to other currency areas with an institutional environment that is more appealing for buyers and sellers.


CEPR Policy Research