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Getting the balance right: Crypto, stablecoin and central bank digital currency
Journal of Payments Strategy & Systems,
16
(1),
39-50
(2022)
Abstract
The rise of new forms of private money is reviving a long-standing debate on the appropriate balance between private and public interests in money and payments. This paper provides an integrated policy analysis of various digital assets that may function as money, namely, bank deposits, non-backed cryptos, stablecoins and central bank digital currency (CBDC). This paper argues that public and private money need to coexist in order to get the best of both worlds, that is, trust and innovation. Getting the balance right, however, is no easy task. It requires a digital update of public money and the effective regulation of cryptos and stablecoins. This paper argues that convertibility between public and private money should be a leading principle both for the design of CBDC and for the regulation of stablecoins with the potential to be widely adopted as a means of payment.
Keywords: digital payments; cryptos; stablecoins; CBDC; regulation
The full article is available to subscribers to the journal.
Author's Biography
Wilko Bolt is a Senior Economist in the Economics and Research division of the Dutch Central Bank and Professor of Payment Systems at the Vrije Universiteit Amsterdam. He has also worked as a researcher at the European Central Bank in Frankfurt and Federal Reserve Bank of New York. His main research areas are payment systems, money and banking and platform economics.
Vera Lubbersen is an Economist in the Payments and Market Infrastructures division of the Dutch Central Bank and a PhD student at the Vrije Universiteit Amsterdam. Her main research areas are money, banking and payments. She specialises in cryptocurrencies and central bank digital currencies in particular.
Peter Wierts is a Senior Economist in the Payments and Market Infrastructures division of the Dutch Central Bank. He is also a part-time associate professor of finance at the Vrije Universiteit Amsterdam, where he teaches financial regulation. Previously, he worked at the European Commission and the Dutch Ministry of Finance.
