Virtual Currencies – Monetary policy dilemmas and regulatory challenges

Abstract

Although the topic of virtual currencies is not completely new, the current technological developments and the extent of the globalisation process appear to have changed the scope of the research efforts needed to cover not only the advantages and opportunities but also the disadvantages and threats that the expansion of virtual currencies can pose for monetary policy and the safety of the financial system. This paper comprises a brief presentation of the different types of virtual currencies and identifies some of the most significant implications of large-scale virtual currency adoption for monetary authorities and regulators while providing an overview of the main trends in the evolution of virtual currencies. In the end, one conclusion is evident: whatever monetary policy or regulatory issues arise from the use of virtual currencies, their consequences are far from virtual.