The Evolution of Money and the Control of Central Banks
In this article, the author discusses the evolving nature of money and the desire of central banks to maintain control over its definition and utility. They highlight how the emergence of bitcoin has forced people to question the traditional definition of money and its role. The author criticizes ECB board member Fabio Panetta for dismissing crypto assets as a form of money, despite acknowledging that the nature of money evolves. They argue that Panetta’s comments reflect a desire for centrally controlled innovation and regulation of free market evolution. The article also discusses the recent annual report from the Bank for International Settlements (BIS), which dismisses crypto assets as a flawed system and advocates for central bank control over the future of money.
Key Points:
- Central banks want to maintain control over the definition and utility of money.
- The emergence of bitcoin has prompted a reevaluation of money’s definition and role.
- ECB board member Fabio Panetta dismisses crypto assets as a form of money.
- The BIS annual report criticizes crypto assets and advocates for central bank control.
- The very essence of money is being re-considered, with questions about programmability and fungibility.
Hot Take:
The desire of central banks to control the evolution of money is a concerning trend. While the nature of money is indeed changing with technological advancements, it should be allowed to evolve organically. Central bank control limits innovation and stifles the potential benefits that crypto assets and decentralized finance can bring. Embracing the possibilities offered by programmable money and exploring new use cases should be encouraged, rather than dismissed. The future of money should not be dictated solely by centralized institutions, but should be shaped by a diverse range of actors in the financial ecosystem.
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