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Money and payments in the digital age: innovations and challenges


  • Velde, F.


Virtual currencies like bitcoin are protocols that maintain consensus among participants about legitimate ownership of assets; ownership is transferred by modifying the consensus appropriately. In monetary applications the asset is a chain of transactions in scarce supply because the initiation of valid chains is restricted. Similar protocols, using a variety of methods to establish consensus, could facilitate simple or complex transfers of financial assets and reduce transaction and record-keeping costs, but doing so will require costly changes. Distributed ledgers replace trust between counterparties with trust in the protocol. Regulators will need to adapt their frameworks to ensure that the actors in payments and markets abide existing rule and do not create new risks, but also to protect the trust in the new protocols.

Suggested Citation

  • Velde, F., 2016. "Money and payments in the digital age: innovations and challenges," Financial Stability Review, Banque de France, issue 20, pages 103-111, April.
  • Handle: RePEc:bfr:fisrev:2016:20:11

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