The Wider Impact of a National Cryptocurrency

This study looks at the impact of a national cryptocurrency on the payment landscape in the midst of the rise of global public cryptocurrencies and interest from central banks in a possible national cryptocurrency. The impacts are analysed for consumers, merchants, banks, payment providers, international money transfer operators and central banks. The study analyses the pros and cons for each player with an overall impact ranking. There is a particular emphasis on central banks as they hold key regulatory oversight for economic and financial matters affecting a country. Whilst finding that there is an overall benefit, there are also significant risks. A sandbox approach is proposed for specifically mitigating some of the risks of introducing a national cryptocurrency.

Policy recommendations

• Governments should explore the potential benefits of the technology behind cryptocurrencies because the benefits to payment players is overall positive.
• Central banks should consider a crypto-sandbox approach to mitigate the potential risks of issuing a national cryptocurrency. The crypto-sandbox should include payment players and specific testing for special cyber-security attacks and economic changes.
• A possible area of immediate benefit from cryptocurrency technology is B2B transfers. Central banks should consider how this technology can benefit funds transfers between banks and companies without the complication that comes with using the technology among consumers at large.
• Once more experience and learnings is gained from the sandbox, the technology can then be slowly expanded to the consumer and cross-border markets after a thorough examination and controls have been put in place for possible risks and policy changes.