The Czech Republic National Bank urges not to be afraid of cryptocurrencies
RegulationBit News Today2 min read
The Czech National Bank published a statement on its website addressing bitcoin and cryptocurrency, stating there is no reason for banks to fear. Titled "Don't be afraid of bitcoin", the statement sought to address popular assertions regarding the potential threats that bitcoin and other independent currencies pose to existing monetary systems and traditional money. The Czech National Bank maintains that banking institutions have no reason to fear bitcoin and other independent currencies or worry about them sidelining traditional money. Bitcoin's market capitalization and usage in electronic transactions remain relatively negligible.
Back at home, in Prague, bitcoin has already gained popularity among libertarians, some of them Mojmír Hampl's ex-colleagues or friends from the University of Economics in Prague. He told the listeners at the OMFIF roundtable that he could show them a place in the city where one can only pay in bitcoin. Although libertarians view bitcoin as a genuine alternative to the existing monetary order, all alternative currencies remain negligible in scale, with worldwide electronic transactions in bitcoin amounting to only 16 percent of those conducted in the Czech koruna, a currency used by just 10.5 million people.
Hampl emphasized that a good currency possesses a stable purchasing power, and that bitcoin's fixed supply makes it inherently volatile. The bank noted that this directly opposes the elastic money system, where the money supply must adjust flexibly over time to keep purchasing power relatively constant. Monetary policy in the late 19th and 20th centuries taught that price stability matters, not money supply - a lesson central bankers failed to explain when they adopted unorthodox policies to maintain price stability during and after the 2008 financial crisis.
Many questions remain in areas like anonymity, susceptibility to cybercrime and IT issues.
Amid hyperinflation, the people's money like bitcoin demonstrates how fiat currencies controlled by governments lose their worth - as catastrophic events make the value of currencies plummet. The cryptocurrency also solves the Byzantine Generals' Problem as trust isn't a factor and no government can shut it down, block it, or control it.
