Influence Of Virtual Currency On The Function Of Central Bank

Virtual currency is a new thing which appears with the rapid development of internet. There is no accurate definition of virtual currency up till now. At the beginning of appearance of virtual currency, it was confined to its issuer. With the development of recognition of virtual currency, some virtual currency can not only buy virtual commodities, but also buy real commodities. Although virtual currency is not allowed to exchange into RMB, it has been a public secret that speculation and transfer of virtual currency are prevailing in private.The appearance of virtual currency will have some influence on the functions of central banking. According to the Bank Law of our country, the authority to issue currency shall be vested in the central bank. The issuer of virtual currency is all kinds of enterprises. For central bank, it will not only impact the authority to issue currency, but also the seigniorage. The second function of central bank is making and implementing currency policy to adjust currency supply. Virtual currency will change currency demand and supply. This makes central bank facing certain difficulties when it adjusts currency supply by changing currency policy.In addition to the above-mentioned problems, virtual currency may have impact on the legal order of one country. The virtual and anonymous nature of virtual currency makes the current economic and law systems show many defects.These defects may provide a good perform for money laundering, gambling and tax evasion. Although study on virtual currency is just the beginning at the present stage, the rapid development and related problems of virtual currency have drawn attentions of departments concerned, such as The People's Bank of China. Therefore, subject selection of this thesis is of great practical significance. On the theoretical side, the network economy has many impacts on the definition and category of currency, currency supply and currency policy, which may lead to the restructure of related theories.Contents of this thesis are as follows: First, after making a review of research on virtual currency at both home and abroad, this thesis raises the mainly discussed and studied issues. Second, the writer analyzes the background and reasons of appearence of virtual currency. And make a comparison between virtual currency and electronic money, to show the object of this study is virtual currency which is issued by network carriers. In addition, this thesis analyzes impacts, which caused by virtual currency, on the authority to issue currency, seigniorage, currency demand, currency supply, currency policy aims, currency policy tools, and so on.Main conclusions are as follows:First, virtual currency possesses the potential to be a new form of currency, because of some part of currency functions. Issue of virtual currency will impact the authority to issue currency, and reduce seigniorage.Second, currency supply will be fluctuating, which will increase the difficulties of currency supply adjusting implementing by central bank.Third, making monetary policy will be hard for central bank. And the effect of monetary policy will be affected because of the existing of virtual currency.The fourth, the course of using virtual currency contains some risks, such as the run risk. Safety of virtual currency can not be safeguarded. In addition, money laundering by means of virtual currency will happen. There is a need for stressing supervision of banks.The innovations in the dissertation are as bellow:First, the subject of this thesis is novel, in advanced position and keeping pace with the times. Second, deviating from previous studies, this thesis analyzes and illustrates the impacts caused by virtual currency on all the three functions of central bank. The third, suggestion about establishing the third-party settlement organization is given. Finally, the writer considers that virtual currency do not necessarily causes increase of currency supply, which is different from previous researchers. The deficiency in this thesis is lacking enough support from data.