The siege of digital assets on central banks' monetary control. The legal-economic question of regulating cryptocurrencies (or not)

Abstract

This research work is thematically framed within the digital economy. It delves into the effects of digital assets and the encryption technology that supports them (blockchain) on centralized monetary control. Using a comparative analytical methodology focused on the legal-economic analysis of selected financial systems, this paper intends to demonstrate that crypto assets undermine the effectiveness of monetary policy as an instrument of price stabilization, by de facto becoming substitutes even more effective than traditional money, though excluded from money supply's regulation. Further, the paper aims to formulate a critical judgment on the regulatory need for the final integration of crypto assets into the financial system by way of homologation to legal tender money; or merely by substituting the latter with a new digital currency, as a way of retaining control over the money supply that centralized monetary policy is targeted.