Cryptocurrency is the newest craze that’s sweeping the world right now and some countries are currently expressing interest at the possibility of issuing their own blockchain-based virtual currencies. This idea seems quite popular among autocrats looking for means to avoid or undercut international sanctions enforced by the global banking system. However, supporters of government-backed cryptocurrencies believe that if this ever happens, the international monetary system that we know of will change drastically.
Which countries are considering cryptocurrencies?
Countries that are currently opening up to the possibility of cryptocurrencies include Russia,, Brazil, China, India and five former Soviet republics. In fact, Russia’s central bank plans to hold talks to the aforementioned countries about creating a Super Cryptocurrency that is used in countries that make up about 40% of the world’s population. According to David Tweed of Bloomberg News, Fan Yife, Deputy Governor for the People’s Bank of China, wrote an article raising the possibility of issuing a digital currency to commercial institutions in China. Sweden’s central bank is considering issuing its own digital currency, e-Krona, as it fears that widespread use of various digital currencies controlled by private sectors and individuals could harm competitiveness.
How would governments benefit from digital currencies?
Cryptocurrencies, by definition, are non-governmental and are developed independently from the authorities. However, a government-issued digital currency is easier to control compared to traditional paper money. It is also easier to regulate money supply through changes in interest rates with cryptocurrencies. This would be more direct, effective and cost-efficient. Another way for governments to benefit from cryptocurrencies is that it makes tax evasion and similar cases easier to trace and crack down. Issuing their own digital currencies also seems a good move for governments that face international sanctions.
How would countries use digital currencies to avoid sanctions and what would this mean to the global monetary system? We will be discussing about these points in the next few days so check our site daily for updates and new information on cryptocurrencies.