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  5. Cryptocurrencies: Political Economy and Economic Policies
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Cryptocurrencies: Political Economy and Economic Policies

Paper Session

Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)

Hosted By: Union for Radical Political Economics
  • Chair: Julio Huato, St. Francis College

A Contribution to the Radical Critique of Cryptocurrencies

Julio Huato
,
St. Francis College

Abstract

This paper offers a radical critical reflection on the cryptocurrency phenomenon making an effort to root it in a proper understanding of money as a value form in late capitalist society. It seeks to identify conditions under which privately-issued decentralized cryptocurrencies, such as Bitcoin, may constitute viable -- though never predominant -- monies, i.e. their historical necessity as specific monetary forms. The departure point is the Marxist conceptualization of money, both its basis as a commodity form and its apex as a capital vehicle; a conceptualization that invites a further clarification of the familiar yet still vexing category of the commodity. The reflection also aims to exhibit the underlying wealth or productive force on which cryptocurrencies are necessarily erected, a tangible physical reality that devotees and critics deny or ignore, thus dissipating the common Cartesian mystifications that surround them. The reflection also seeks to highlight their dependence on the state, which they imagine to have escaped. The paper concludes by sketching a critical socio-economic appraisal of blockchain -- one of the technologies that support cryptocurrencies and so-called "digital assets" in general -- and of its potential use in the economic organization and planning of a feasible democratic socialist society.

The Political Economy of Bitcoin

Edemilson Paraná
,
Federal University of Ceara

Abstract

Based on the theoretical understanding of money as a social relation, this work presents a comprehensive analysis of Bitcoin as a technical and monetary artefact, including its political economy, historical background, underlying ideas, and conditions of possibility. Among other things, it shows why Bitcoin is unable to establish itself as an alternative to the current monetary system as it does not meet elementary requirements of money, despised by the neoliberal ideology that sustains it. That is, despite its declared search for a substitution of world money, for monetary stability against the supposedly ‘inflationary’ state money and for ‘depoliticization’, decentralization and deconcentration of monetary power, what is empirically observed is precisely the opposite: low volume and range of circulation, great instability against state money, transactional (economic, ecological etc.) inefficiency and greater relative concentration of political and economic power among its users. In the end, the non-fulfilment of the radical neoliberal aspirations of Bitcoin shows that the attempt by its creators and enthusiasts of emptying money of its social content, i.e., to ‘neutralize’ it, in capitalism, is not feasible.

Digital Payment Systems: Recent Experiences and Future Challenges

Simone de Deos
,
State University of Campinas
Lais Araujo e Silva
,
State University of Campinas

Abstract

The emergence of Bitcoin and its related technologies, such as a decentralized payment system and the use of encryption to validate transactions, has sparked a number of research studies and experiments in various economic sectors. Corporations, financial institutions, banks, and Central Banks were pressed to reflect on the concept, technology, and characteristics of the peer-to-peer payment system developed by Nakamoto. In the specific case of Central Banks, research studies have suggested the possibility that monetary authorities issue their own cryptocurrencies. Unlike their private counterparts, government-issued cryptocurrencies would be issued and destroyed exclusively by Central Banks. Along with the development of projects for new cryptocurrencies, Central Banks also made progress developing more efficient and interconnected payment systems. One recent case is the unveiling of an instant payment system created by the Brazilian Central Bank (BCB) called PIX, launched in November of 2020. In parallel, the European Central Bank (ECB) leads a similar initiative by supporting 16 European banks in the creation of a unified payment system for consumers and businesses consisting of a physical card and a digital wallet used for payments, transfers, and withdrawals. The goal of this paper is to discuss these ground-breaking initiatives, highlighting their development process, characteristics, functionalities, and implementation challenges.

Central Bank Digital Currencies and Implications for Monetary Policy

Olivia Bullio Mattos
,
St. Francis College
Fernanda Ultremare
,
Federal University of Rio Grande do Norte-Brazil
Ana Rosa Ribeiro de Mendonça
,
University of Campinas

Abstract

The merits and risks of introducing central bank digital currencies (CBDCs), i.e. some form of central bank money handled through electronic means and accessible to the broad public, have recently started to be discussed in both academia and central banks. Among the benefits is a more efficient, secure, resilient and inclusive retail payment system, better control of illicit payments, and improvements on financial stability. The main concerns would involve a disintermediation of commercial banks, the implications for monetary policy, and the risks associated with international currency competition among CBDCs. That said, this paper aims to survey and summarize the engagement of central banks with CBDCs, trying to understand the implications for monetary policy and financial stability as a whole. In order to reach that goal, the paper is organized as follows: after a brief introduction, we present the 'state of the art' discussion within central banks and the BIS. In the second section, we highlight some recent experiments with CBDCs. The challenges and opportunities for monetary policy are discussed in section three.
JEL Classifications
  • E4 - Money and Interest Rates
  • B5 - Current Heterodox Approaches