The EU’s Policy Department for Economic, Scientific and Quality of Life Policies released a report entitled “Virtual currencies and central banks monetary policy: challenges ahead.” Authored by Marek Dabrowski and Lukasz Janikowski, the report comes at the request of the European Parliament’s Committee on Economic and Monetary Affairs, and its findings are a focal point for the committee’s July 2018 Monetary Dialogues.
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Referring to cryptocurrencies as virtual currencies (VCs), the report examines the functionality of cryptocurrency as a monetary instrument; its most popular iterations in bitcoin, ether and other popular currencies; and its ramifications for governments and their central banks.
In evaluating cryptocurrencies as a novel, potentially disruptive technology, the report ultimately concludes that “[policy] makers and regulators should not ignore VCs, nor should they attempt to ban them … VCs should be treated by regulators as any other financial instrument, proportionally to their market importance, complexity, and associated risks.”
Even so, the report is measured in its findings, and it does expose the limitations cryptocurrencies and their contingent blockchain technology currently pose. Directing its analysis to the question of crypto’s chances to supplant current central banking practices, the report succinctly concludes “the answer seems most likely ‘no.’”
A Fair and Balanced Analysis
In summary, the report reads as a more comprehensive and balanced analysis for cryptocurrency’s possible economic impact than the Bank of International Settlements own. The Swiss bank’s document, which roused the skepticism[2] of leading industry voices, provided outdated research and findings that conveyed a shallow understanding of the industry outside of Bitcoin’s impact.
By contrast, the European Union’s report plays devil’s advocate for both cryptocurrency’s strengths and its weaknesses and examines the asset class from a variety of angles.
In its introductory analysis, the report consistently returns to the
