Categories: CryptoNews

Research Consultant at Bank of Canada Says Bitcoin Standard Unlikely

A Research Consultant at the Bank of Canada has authored a paper that examines the implications of a Bitcoin standard on the global economy and on the roles of central banks.

The paper, A Bitcoin Standard: Lessons from the Gold Standard, was written by Warren Weber, who is a visiting scholar at the Federal Reserve Bank of Australia and a professor at the University of South Carolina.

In his paper, Weber posits a hypothetical scenario where Bitcoin backs all monetary systems in the world, and tries to draw parallels to what transpired when the gold standard was in full force between 1880-1913.

The Abstract reads:

“The paper argues that because there would be virtually no arbitrage costs for international transaction, countries could not follow independent interest rate policies under the Bitcoin standard.”

While the paper states that central banks would not be in charge of setting interest rate under a Bitcoin standard, Weber makes the case that they would still have the capability to act as lender of last resort in an economic downturn:

“The ability of a monetary authority to act as lender of last resort under either the gold or Bitcoin standard is limited. This is in contrast with the almost unlimited ability of central banks to act as lenders of last resort under a at monetary standard.”

Related Post

The paper concludes that a Bitcoin standard can be beneficial due to the predictable rate of minting of the digital currency, unlike the hard-to-predict factors surrounding the mining of gold. However, Weber definitively states that central banks will never allow a Bitcoin standard in the first place, as that would remove the ability of governments to implement interest rate policies.

“Nonetheless, in my opinion it is unlikely that the Bitcoin standard will come into existence, because governments and central bank will take action to prevent it.”

Furthermore, Weber postulates that even if a Bitcoin standard was somehow allowed to come into existence, it would not last very long, “The payments world is changing so rapidly that there will be a technological innovation that provides a potential medium of exchange with the same or greater benefits of Bitcoin or with lower costs.“ writes Weber.

 

Image credit: 1

If you liked this article follow us on twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.

Traderman

Avid blogger, entrepreneur, and cryptocurrency enthusiast. I love writing about cryptocurrency, NFTs, price analysis, and much more!

Share
Published by
Traderman

Recent Posts

Best Altcoins to Invest in Today: Qubetics Sets the Stage for Blockchain’s Future as Bitcoin Hits $108K and Litecoin Soars

The cryptocurrency world has always been a hotbed of innovation, attracting both seasoned investors and…

4 hours ago

Dogecoin Millionaire Predicts This Undervalued Altcoin Could Match DOGE’s 2021 Gains

Dogecoin's 2021 rally was a historic one, turning ordinary investors into overnight millionaires. This magnificent…

5 hours ago

Qubetics Presale Skyrockets to $7.5M as XRP and Arbitrum Lead Best Altcoins for Exponential Returns

The crypto market is always evolving, with big names like Bitcoin and Ethereum leading the…

5 hours ago

Over 300K Users Actively Mine Crypto On BlockDAG’s X1 Miner App While BNB Bulls Eye $3K; What’s XRP’s Price Target?

The crypto market is ablaze with excitement as altcoins like XRP and BNB make major…

6 hours ago

Best Crypto Presale To Buy Now: Rollblock Delivers For Holders With New License, Record Sign Ups and 7000+ Games

Rollblock is quickly becoming the best crypto presale to buy, delivering unmatched value for its…

9 hours ago

Polkadot And Uniswap Gearing For Post-Christmas Jump As Rollblock Raises $7.4 Million in Presale

While Rollblock's continues its crypto presale, with its value increasing regularly, Polkadot (DOT) and Uniswap…

10 hours ago