Because of the widespread adoption of digital currencies like bitcoin, the Reserve Bank of Australia has claimed that the governments will not have as much input in setting up monetary policies to regulate money.
According to a report by the bank’s payments policy division- written by David Halperin, bitcoin has the potential to take value away from Australia’s set cash rate, which means mean a “loss of control over the money and credit creation process.”
If more people adopt bitcoin as their primary means for payment, the central bank loses revenue from issuing its currency. The bank claims that this will lead to instability to financial markets.
For such a threat to effect the bank, bitcoin would have to be used by citizens in far greater volumes. Halperin wrote:
“Due to the limited usage of Bitcoin in Australia to date (given the absence of Australia-based exchanges and that very few Australian merchants accept bitcoins or any other virtual currency), risks to the payments system appear to be limited.”
Of course, the agency expects bitcoin’s volatility to be enough to keep many investors back. Due to bitcoin’s instability in price and value, consumer confidence is still being tested. The feeling is that this will secure the bank’s managements and operations for the foreseeable future.
Fear of Bitcoin
Government institutions continue to have concerns with bitcoin taking over finance. Like several other American regulators, the Pennsylvania Banking and Securities Department has cautioned consumers that investing in virtual currencies like bitcoin and litecoin can be a potentially risky business.
As of late, many US states have been warning citizens of the hazards bitcoin can have on businesses, consumers and investors. States like New York, Wisconsin and Missouri are just a few on that list.
Countries across the world such as India, Russia and China have also warned their citizens of bitcoin’s potential dangers in money laundering, dealing in black markets, and the thefts of thousands of bitcoins due to weak security systems.
Investors are advised to do more research into bitcoin before joining its community by investors; obvious advise that can be used when looking to invest in any new institution.