I thought that paper was neutral, until i read this:
Quote
From the analysis of the existing information it is already possible to draw an initial conclusion:
it is very complicated to obtain a clear overview of the situation regarding virtual currency schemes
at this stage. Almost all of the information that can be found is on the internet, written in blogs
or on web pages where personal bias cannot be excluded (see, for instance, the references listed
in the Annex). With the exception of a few articles from respectable media sources or economics
journals, it is almost impossible to find any comprehensive papers on this issue, since no
international organisations have published statements. A similar problem exists with regard to the
quantitative information and statistics that would be needed in order to assess the speed at which
these virtual currency schemes are growing and the point at which they could become a real threat.
it is very complicated to obtain a clear overview of the situation regarding virtual currency schemes
at this stage. Almost all of the information that can be found is on the internet, written in blogs
or on web pages where personal bias cannot be excluded (see, for instance, the references listed
in the Annex). With the exception of a few articles from respectable media sources or economics
journals, it is almost impossible to find any comprehensive papers on this issue, since no
international organisations have published statements. A similar problem exists with regard to the
quantitative information and statistics that would be needed in order to assess the speed at which
these virtual currency schemes are growing and the point at which they could become a real threat.
In an extreme case, virtual currencies could have a substitution effect on central bank money if they become widely accepted. The increase in the use of virtual money might lead to a decrease in the use of “real” money, thereby also reducing the cash needed to conduct the transactions generated by nominal income. In this regard, a widespread substitution of central bank money by privately issued virtual currency could significantly reduce the size of central banks’ balance sheets, and thus also their ability to influence the short-term interest rates. Central banks would need to look at their existing tools to deal with this risk (for instance, trying to impose minimum reserve requirements on virtual currency schemes).
[/quote]Well yeah, the whole point of the ECB is to inform the banks on upcoming market trends, including possible disruptors. From the tone the author is taking, it seems like it's just something they'll have to plan for compete against for their own survival. I interpreted the bolded line as the banks will have to have reserve requirements on holding virtual currencies as that'll be the only way they'll be able to hedge against virtual currencies taking over as a matter of survival. The only avenue they have against bitcoin is through manipulation of legislation to regulate Bitcoin-fiat exchanges, but if Bitcoin plays out how the creators envisioned this protocol faster than the slow process shutting something P2P like Bitcoin down, then that won't matter as we move into a Bitcoin-denominated marketplace.
