There is result from a research that indicates that it is more desirable for central banks to monopolize rights to issue electronic currencies.
Electronic currency indicates traditional legal currency that is currently used for prepaid transportation cards, small payments, and e-commerce trades and it is different from cryptocurrency that considers developed currencies as accounting units.
“Direct observations are difficult when electronic currencies are issued privately from decentralized environments and there can be moral laxity with people who issue electronic currencies.” said Vice-Researcher Kwon Oh-ik of Bank of Korea’s Microscopic System Research Institute through ‘BOK Economic Research’ that issued on the 18th with a title ‘Effects of Electronic Currencies That Are Issued Privately on Social Welfare’. “In this case, there is a danger of payment breach.”
Issuers need to set up $0.09 (100 KRW) of collateral when issuing $0.09 of electronic currency. If electronic currency is issued privately, collateral value of $0.045 (50 KRW) can be doubled, and it is difficult to observe private electronic currency one by one.
In this report, it is indicated that any private economic media can issue electronic currency. Also, electronic currency along with legal currency set up a complete substitutional relationship model as payment methods
Central banks can control amount of supplies of legal currencies by selling government bonds while issuers of electronic currencies possess collateral government bonds for guarantee.
If issuers of private electronic currencies are controlled to prevent moral laxity, there will be social costs. By haircutting collateral values of issuers, commercial liquidity is supplied excessively than its optimal level.
He made an evaluation by indicating social welfare when taxes are levied on issuers of private currencies will be significantly lower compared to an economy where central banks have monopolistic rights to issue electronic currencies because haircut does not need to be applied when central banks issue electronic currencies.
“Even if when an environment where currencies are issued privately and competitively due to development of technologies, there have to be appropriate regulations regarding issue of private currencies.”
Staff Reporter Ham, Jihyun | goham@etnews.com