A study by the Russian Analytical Credit Rating Agency (ACRA) has found that cryptocurrencies do not pose a danger to the country’s financial system, saying that digital currencies have not yet fully implemented any of the functions of money.
The study estimates the market value of cryptocurrencies attributable to the Russian Federation economy that are held by residents in the first quarter of this year to be between $7.5 billion and $14 billion or 1-2% of the M2 money supply.
Part of the study reads:
“This volume is concentrated among a small number of owners, which eliminates risks for the Russian financial system. If such a volume of cryptocurrency were distributed among the Russian population as widely as foreign currencies, for example, the volatility of their exchange rate would have an impact on the stability of the Russian economy.”
The researchers suggested that the Central Bank of Russia use the same policies regulating foreign currencies that it enforces for fiat currencies. They said that digital currencies could serve a purpose as cash foreign currency that can be traced.
The study further stated:
“Comparing the cryptocurrency with the fiat state money and commodity money (having its own intrinsic value), we see the main difference between the cryptocurrency that its current market value is formed mainly on expectations of investors' readiness to sell it in the future at a higher price. Given the uncertainty of the formal status of the cryptocurrency and the absence of state guarantees (regarding its stability, as well as use as a means of payment), its performance as a means of accumulation largely depends on the expectations of current investors. Estimated speed of circulation, for example.”
The study pointed out that although these digital assets are not in any form technically money, the average trading volume of cryptocurrencies reaches nearly $50 billion per month. At the same time, the study added that the volatile digital currency market has the same impact on the interest rate as the sharp fluctuation in the exchange rate of the Russian ruble against foreign currencies.
In late May, first deputy governor of the Russian central bank Olga Skorobogatova described blockchain technology as still immature for use in large-scale infrastructures.
Skorobogatova made the statement during a speech at the St. Petersburg International Economic Forum 2018 (SPIEF 2018), where she stressed that blockchain has not yet gained widespread adoption except for Bitcoin and other virtual currencies.
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