Your Local Bank Could Be the Central Bank

The financial community, increasingly divided over the future of digital currencies, is looking to monetary authorities and regulators for signals. The problem is that those signals are decidedly mixed.

The European Central Bank is discussing putting restrictions in place, with governing council member Ewald Nowotny describing the hype around them as "dangerous and dubious" in an interview this week. International Monetary Fund Managing Director Christine Lagarde, by contrast, claimed recently that cryptocurrencies could soon become mainstream: "In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money." Lagarde is right, but few central banks seem prepared. Banning technological development without providing a modern alternative to fiat money is doomed to fail.