A recent study suggests that the existence of private decentralized cryptocurrencies such as Bitcoin can have a health impact on government fiscal and regulatory policies.
This view is made by three researchers in their paper "How does a private digital currency affect government policy? Said in the book. They believe that in the case of the global financial system, the impact of cryptocurrency is not limited to whether it is used by the majority of the population.
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The author of the article believes that cryptocurrencies can be used to test fiscal and regulatory policies. Although the current cryptocurrency may not be able to replace the US dollar, its positive impact on the existing monetary system can be reflected in three aspects.
First, citizens can benefit from the existence of cryptocurrencies because they offer a variety of options. In addition, private digital currencies can curb monetary policy, resulting in lower inflation.
Second, cryptocurrencies can encourage local investment and complement and not replace it. In the process, it will constrain monetary policy, such as reducing inflation, resulting in a higher return on investment.
Third, the government also benefits from using cryptocurrencies in the local economy because it can earn income through taxation and benefit from local investments.
The author of the paper also believes that “private digital currencies are important in emerging markets facing crisis. In those economies with high instability, the government will only formulate policies based on its own interests without considering the interests of citizens.”
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By Liang CHE
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