Summary of Cryptocurrencies and Monetary Policy

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Cryptocurrencies are rapidly gaining popularity, so speculation abounds on whether they will ever supplant cold hard cash. If a virtual currency does push fiat money to the curb, central banks’ monetary policy making could become ineffective. In this incisive analysis, economists Grégory Claeys, Maria Demertzis and Konstantinos Efstathiou take an objective look at the broad scope of the role of money in an economy, and they make a strong case for why cryptocurrencies are unlikely to replace official currencies any time soon. getAbstract recommends this useful primer on money and society to investors, financial executives and cryptocurrency enthusiasts. 

In this summary, you will learn

  • How cryptocurrencies function as money and
  • Why cryptocurrencies are not poised to displace government-issued currencies. 

About the Authors

Grégory ClaeysMaria Demertzis and Konstantinos Efstathiou are economists at Bruegel, a European think tank.



Some 1,500 cryptocurrencies are now available, with a collective market value of about $330 billion. The two leading tokens, bitcoin and ether, account for 38.6% and 17.6%, respectively, of the total. In contrast, the two top official currencies, the US dollar and the European Union’s euro, circulate to the tune of $1.6 trillion and 1.2 trillion [$1.4 trillion], respectively. The ability of cryptocurrencies to replace official money depends on their capacity to fulfill societal needs for economic stability and public accountability, not just on their competence...

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