In recent years, the world of payments has seen a number of major technological innovations, the latest of which are crypto-assets. From the famous bitcoin to stablecoins, these new assets arouse both enthusiasm and fear. What are their nature and intrinsic value? Is money invested in crypto-assets as safe as in a bank? Are crypto-assets monitored and regulated?
But the impact of crypto-assets doesn’t stop there. Indeed, they have also given rise to a new model of finance, decentralized finance (DeFi). What are the specifics of this intermediary-free finance? How are central banks reacting to this new “currency war” between official currencies and private digital currencies? What tools are they developing to defend their sovereignty? Through a clear and accessible analysis, the authors answer and demystify these hotly debated questions.
Definitions, players, services, innovation benefits, micro- and macro-economic and financial risks, and regulations are discussed, leading to the conclusion that the future lies in the development of central bank digital currencies, since “crypto-assets should not be the currency of tomorrow.
This conclusion is based on two elements. The first concerns the competition between public and private money, which was favored by Friedrich von Hayek. However, one of the attributes of money put forward since the 1980s is that of trust, based on a social contract. The second point concerns the idea that monetary policy is impotent. The success of Mario Draghi’s “Whatever it takes” policy in July 2012, on the one hand, and the responsibility, albeit partial, of central banks in controlling inflation, on the other, invalidate this idea: monetary policy remains relevant to “reassure” economies, investments and citizens! This would be impossible with an anonymous, disembodied monetary system.
This book is extremely educational, using simple words that don’t “drown” the reader in technical or regulatory legalese. Nevertheless, it contains everything an “enlightened” citizen needs to know to find his or her way in this world of innovation, which is already affecting everyone in terms of payments, insurance services or real estate matters.
This book is aimed not only at banking, finance and insurance professionals, as well as lawyers, but is also an essential resource for students at business and engineering schools, political studies institutes and universities. Last but not least, it is intended for all those who wish to understand the crypto-asset ecosystem, so as to use it without being subjected to it. But within an operating framework that is marked out so as not to harm the common good. A must-read!
Column written by Dominique Chesneau
