Cryptocurrencies & the Challenge of Global Governance

Cryptocurrencies & the Challenge of Global Governance

Blog Article

The recent explosive development of new forms of digital currency opens up unprecedented opportunities and poses significant regulatory challenges.This new form of digital currency lowers the costs and other barriers to the global movement of money, international trade, foreign investment and speculation, while simultaneously enhancing the anonymity parts on which tax evasion, money-laundering and other illegal activities thrive.It also liberates the creation of money and regulation of economic activities from the political control of national governments and central banks.Since the value of a currency is related to the size of the population, strength of the economy and value of transactions that utilize it, a basket of cryptocurrencies could emerge as the first prototype of a world currency whose value is backed by the total productive capacity of the entire human community.

Moreover, the triad of Internet, distributed ledger technologies and cryptocurrencies could serve as the basis for the development of new global economic potentials in a manner similar and a degree far exceeding the economic impact of the World Wide Web over the past two decades.At the same time, the rapid deployment of cryptocurrencies could have profound impact on the capacity of governments to tax transactions, income and wealth, one of the main pillars of the modern nation state.The development of autonomous global cryptocurrencies could dramatically reduce the control and effectiveness of existing regulatory mechanisms at the national level and generate considerable pressure for the evolution of more effective institutions for global governance.They could provide compelling incentives for national governments to enhance international cooperation and strengthen the functioning of international institutions to fill the regulatory void.

International organizations will play an important role in harnessing the potentials and minimizing the risks arising from the growing usage of cryptocurrencies.Most of the research METHYL B-12 conducted by central banks on cryptocurrencies over the past four years has focused on risks and benefits as viewed from the perspective of national economies and national monetary systems.This paper explores the global prospects and potential implications of the widespread adoption of cryptocurrencies for cross-border transactions and the role of international institutions in their regulation and global fiscal governance.