Central bankers report calls for institutional control of bitcoin, virtual currencies

Central bankers and several mainstream financial minds – Warren Buffett, Charlie Munger and Jamie Dimon – have surmised for quite some time now that peer-to-peer decentralized virtual currencies, predominantly bitcoins, will cease to exist because of what they say is due to a lack of inherent value as well as its immense price volatility and the negative discernment that the general public has.

Last week, two senior central bank officials published a report entitled “The Evolution of Central Banks: A Practitioner’s Perspective,” which discussed the future, or lack thereof anyway, of bitcoin and how central banks could make substantial gains if they were to issue their own digital currencies.

Authored by Bank of England chief economist Andrew G. Haldane and Jan F. Qvigstad, executive director of Norges Bank, Norway’s central bank, the two men noted of how the cryptocurrency industry is playing an important and transformative role in the marketplace right now.

“If [bitcoin] proves to be robust, it would be an important step forward in thinking about how trust in money is created and sustained and hence the future of money and payments,” the two senior central bank heads wrote.

The authors go on to cite the two general contradictory viewpoints: one group says bitcoin has failed as an experiment in private money, while another group has praised the technology behind bitcoin because it could very well revolutionize the methods in which consumers pay and could prompt them to consider the value of goods, services and currencies.

Nevertheless, according to Haldane and Qvigstad, bitcoin and other digital currencies are unlikely to change the global payments landscape. Instead, it’ll be firms like Google and PayPal that will provide models that will improve the current infrastructure rather than introducing new components.

“For a variety of reasons, it seems unlikely that bitcoin itself will change the landscape for money and payments. But, the technology underlying bitcoin perhaps could,” they wrote in the report.

In the near future, central banks could take advantage of bitcoin technology even if they opt to avoid implementing virtual currencies. “Central banks have never been technological first-movers. But, the game of money and credit are repeated ones. And in repeated games it is usually the last-mover that matters most.”