1. The Function Transformation of Central Banks and Commercial Banks under the Application of Digital Fiat Currency
- Author:
- Song Shuang and Liu Dongmin
- Publication Date:
- 04-2019
- Content Type:
- Policy Brief
- Abstract:
- Since the advent of Bitcoin, digital currency and its underlying distributed ledger technology have been spread and applied rapidly around the world. Traditionally, currency issuance and circulation are based on binary tree structure, with the central bank as the highest node, commercial banks in the middle and the public and enterprises at the bottom. However, in the distributed ledger system, all nodes have similar privileges and can transact with each other directly. Hence, the advocators promote the potential of digital currency to subvert the monetary control of sovereign countries and alter the traditional business of commercial banks with the characteristics of decentralization, trust-free intermediary, non-tampering and encryption security. On the other hand, the dissenters believe that transaction nodes in distributed ledger system will be greatly increased, and hence reducing the professionalism of transaction processing and forfeiting the authenticity of original information, which then becomes difficult to play a significant role in the future economy.
- Topic:
- Science and Technology, Economy, Banks, Central Bank, Currency, and Bitcoin
- Political Geography:
- China and Global Focus