In the U.S., both banks and regulators are studying distributed ledger technology and Fed officials have made a couple of formal speeches on the topic in the past 12 months, but have voiced reservations about digital currencies themselves.
Policy Issues
Fed Governor Jerome Powell said in March there were “significant policy issues” concerning them that needed further study, including vulnerability to cyber-attack, privacy and counterfeiting. He also cautioned that a central bank digital currency could stifle innovations to improve the existing payments system.
At the same time, central bankers are obviously wary of the risks posed by alternative currencies -- including financial instability and fraud. One example: The Tokyo-based Mt. Gox exchange collapsed spectacularly in 2014 after disclosing that it lost hundreds of millions of dollars worth of bitcoin.
But for all their theoretical tinkering, official-money guardians have largely stood by as digital currencies have taken off. The explosion in initial coin offerings, or ICOs, is evidence. Investors have poured hundreds of millions of dollars into the digital currency market this year alone.
The dollar value of the 20 biggest cryptocurrencies is around $150 billion, according to data from Coinmarketcap.com. Bitcoin itself has soared more than 380 percent this year and hit a record -- but it’s also prone to wild swings, like a 50 percent slump at the end of 2013.
"At a global level, there is an urgent need for regulatory clarity given the growth of the market," said Daniel Heller, Visiting Fellow at the Peterson Institute for International Economics and previously head of financial stability at the Swiss National Bank.
Self Interest
Rather than trying to regulate the world of virtual currencies, central banks are mainly warning of risks and attempting to garner some advantage from distributed-ledger technology for their own purposes, like upgrading payments systems.
Carl-Ludwig Thiele, a board member of Germany’s Bundesbank, has described bitcoin as a “niche phenomenon” but blockchain as far more interesting, if it can be adapted for central-bank use. In July, Austria’s Ewald Nowotny said the he’s open to new technologies but doesn’t believe that will lead to a new currency, and that dealing in bitcoin is effectively “ gambling.”