Money20/20 Review: Central Banks Closely Monitoring Crypto and Blockchain

Over the past few years, central banks and financial institutions have had to grapple with the emergence of cryptocurrencies and their steadily growing adoption around the world.

In 2018, some of the world's most influential central banks are sitting up and taking notice of cryptocurrencies and what they like to describe as distributed ledger technology.

Jurgilas addressed the talking point of a central bank digital currency by unpacking how cryptocurrencies came into existence in the first place.

"I don't see that happening as long as central banks continue to do a good job of maintaining monetary policy. But could a cryptocurrency really spell the end of fiat currency? I think so. In a situation of hyperinflation where a central bank has abdicated responsibility for stability then you could see a case for cryptocurrency."

As Moser explained, the referendum originated in the 2008 financial crisis and "People just lost trust in the banking system" and want to hand that back to the central bank.

In essence, normal banks would no longer be able to issue currency and people would have accounts at the central banks.

"There would be various ways to implement that. One way would be for the central bank to issue a central bank digital currency, another option is to open up Central Bank bank accounts for everyone directly there."

"In general no but I think it depends on the fiat currency of the central bank. Of course, if a currency is not performing well, you have hyperinflation and a country where people lose trust of rule of law of its central bank. It depends on the central bank, as long as they do a good job there is no reason for fiat currency to disappear."

A major take away from this topic is that central banks are beginning to change their tune towards cryptocurrencies.

There is far less apathy towards blockchain technology, to the extent that banks and financial service providers are actively look at ways to implement the technology to improve their systems.