Friday, 30 November 2012

Money - decus et tutamen - how do you wrap it up?


Some time back I was Blogging about “Money without Banks” I was prompted to look at this again by some one calling about the vagaries of the current banking system and Governments.

One line in the editorial of the New Scientist from June 2011 says “While fraud is still a concern, the financial collapse of 2008 has called into question the competence of the central banks that are supposed to manage national currencies.”

 In November 2012 the editorial is again discussing something similar in the form of Bitcoins. This time there is another interesting line: “Like all truly disruptive technologies, Bitcoin is hard to conceptualise at first. But "fiat" money - the kind we use today, based on pieces of metal and paper whose material and face value have long since drifted apart - was once baffling, too.

We have yet to see whether governments and banks will step in to stifle the possible evolution of new peer to peer currency. But one way or the other things could be changing.

In an article on the Bitcoin the New Scientist says that the European Central Bank has taken interest, last month publishing 
a report on virtual currencies. It says such currencies will have little impact on real-world financial stability for now, but if the popularity of Bitcoin and its ilk increase, central banks may have to start regulating them. One wonders what form this “regulation” would take.

Where will the smart money go? Can (over) regulation be avoided?

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