Crypto’s Rising. So Are the Stakes for Governments Everywhere

For centuries, money issued by governments has served as the lifeblood of the global economy — the currencies in which people hold savings, make payments and keep accounts, and in which nations measure their wealth and geopolitical power. But in our digital age, it’s facing a bizarre, postmodern sort of competition. Cryptocurrencies — created to supplant the traditional, sovereign kind — have become a widespread obsession, inspiring their own counterculture and attracting hundreds of billions of dollars in speculative investment that may or may not have anything to do with their viability.

How, if at all, should issuers of the world’s official currencies respond? In a word: carefully. As financial regulators, they need to strike a balance between encouraging innovation and preventing harm. Most important, as competitors in the global market for cash, they need to improve their products.