5th August 2017

CNB Board Member M.Hampl: Don't be afraid of bitcoin

Prague is home to a strong community of cryptocurrency supporters and users. The city even has a café where customers can pay only in bitcoin. Many users of digital currency see it as a viable alternative to the current monetary system. They even question whether institutions such as the Czech National Bank should be afraid of bitcoin and other independent currencies, and of their power to marginalise traditional money.

There really is no reason for banks to fear them. All of the alternative currencies are negligible in terms of size and scope: electronic transactions using bitcoin worldwide amount to only 16% of the electronic transactions conducted in the Czech koruna, a currency used by just 10.5m people.

A more fundamental issue is bitcoin's constantly changing purchasing power. Money is a means for paying and settling transactions, a unit of account and a store of value. Swift changes in purchasing power are the enemy of any good currency. If a currency is losing value, people want to get rid of it quickly. In contrast, if it is gaining value, they hoard it.

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Members of the American Chamber of Commerce in the Czech Republic