Bank of Korea: Costs Could Limit Cryptocurrencies Use
Written by researchers at the Bank of Korea and Hongik University in Seoul, the paper seeks to identify the factors that could drive the use of a blockchain-based currency, as opposed to government-issued currencies.
According to the authors, there is likely to be a symbiotic relationship between both economies if digital currencies are used more widely. Namely, when the cost of using one currency rises, the other is likely to fall in value, then speculation may appear, thus increasing the attractiveness of the other option.
However, they believe that costs will keep systems in balance. In a world of imperfect currency with uncertain costs associated with the use of a currency, it is unlikely that the relative costs of the use of the digital currency Are low enough to take out or leave the other and, consequently, to expel the fiduciary currency completely”.
Therefore, the research is in line with a broader trend among Central Banks, which are investigating the deployment of digital currencies, both by the institutions themselves and by other groups or organizations.
In fact, the authors postulate that their research could give financial regulators a greater understanding of this dynamics as such systems become more frequent. That is to say that these results can give certain successes in what can happen in an economy that accepts the digital currencies.
On the other hand the authors of the study write the following: “The result of our work can be useful for policy makers and regulators who want ideas in the new monetary system, where a digital currency issued by the private coexists with a bank Central issuing fiduciary currency ”
Therefore, The report is the latest work for Bank of Korea, which has been among the central banks that make statements and are the most progressive on the subject of blockchain technology.
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