There could also be a monetary policy aspect to consider. ECB Governing Council member Jan Smets said in December that a central-bank digital currency could give policy makers more leeway when interest rates are negative. Policy makers have long been concerned that if they cut rates too low, people will simply hoard cash. The ECB’s deposit rate is currently minus 0.4 percent.
Other central banks see the uses of distributed ledger technology, but worry about the abuses virtual money can be put to outside the official system -- like criminal money laundering and the sale of illegal goods. That’s not to mention the risk that virtual currencies could pose to the rest of the financial system if the bubble were to pop.
‘Great Promise’
Bank of England Governor Mark Carney -- who has said blockchain shows “ great promise” -- also warned regulators this year to keep on top of developments in financial technology if they want to avoid a 2008-style crisis.
While Mt. Gox cast a shadow over bitcoin in Japan, it now has many supporters in the world’s third-biggest economy. Parliament passed a law in April this year making it a legal method of payment. Japan’s largest banks have invested in bitcoin exchanges and small-cap stocks linked to the cryptocurrency or its underlying technology have rallied this year as it begins to win favor with some retailers.
With the nation’s Financial Services Agency responsible for bitcoin’s regulation, the BOJ remains focused on studying its distributed ledger technology.
Not Ready Yet
"Central banks are not yet ready for regulating digital currencies," said Xiao Geng, a professor of finance and public policy at the University of Hong Kong. "But they have to in the future since unregulated digital currencies are prone to crime and Ponzi-type speculation."
To be sure, the attraction of virtual currencies for many remains speculation, rather than for households or companies buying and selling goods.
"It is a fad that will die down and it will be used by less than 1 percent of consumers and accepted by even fewer merchants," said Sumit Agarwal of Georgetown University, who was previously a senior financial economist at the Federal Reserve Bank of Chicago. "Even if we can make the digital currency safe it has many hurdles."