Bitcoin’s allure is still based in speculation – leading to occasional wild swings in value. REUTERS/Benoit Tessier
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The Dutch central bank has created its own cryptocurrency – for internal circulation only – to better understand how it works.Russia has shown interest in Ethereum, the second-largest digital currency, with the central bank deploying a pilot program.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.Fed Gov. Jerome Powell said in March there were "significant policy issues" concerning them that needed further study, including vulnerability to cyberattack, privacy and counterfeiting. He also cautioned that a central bank digital currency could stifle innovations to improve the existing payments system."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.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.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.
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