Placing bank and fiat money off balance sheet, using the distributed transaction technologies of Bitcoin and other cryptocurrencies, avoids the need for centralised payment settlement (in central bank money). Just like earlier proposals for ‘narrow-banking’ or 100-percent reserving this prevents bank failure disrupting monetary transactions. Unlike those earlier proposals banks can continue using fractional reserving with ‘x-percent reserving’ offering fine-grained control of unsustainable money and credit expansions. This reform helps achieve monetary outcomes desired by the Austrian school of economics: reducing the need for bank regulation, lender of last resort and bank bail-out.
History
School
Business and Economics
Department
Business
Citation
MILNE, A., 2017. Cryptocurrencies from an Austrian perspective. Available at SSRN: https://ssrn.com/abstract=2946160
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SSRN
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VoR (Version of Record)
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This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/