The Reserve Bank of Australia has acknowledged that the broad adoption of crypto-currencies like Bitcoin could limit the Government’s ability to set monetary policy and regulate taxation.
Wide adoption of Bitcoin could dilute the impact of the RBA-set cash rate and mean a “loss of control over the money and credit creation process”, according to a report authored by David Halperin of the RBA’s payments policy division.
Expanded use also has the potential to threaten the revenue the central bank earns from issuing currency, and inject instability into financial markets, the nation’s central currency regulator said.
But Australians would have to start using the electronic currency in far greater volumes than they do currently before any real threat would materialise, according to the document released under FOI laws and first reported by the AFR.
“Due to the limited usage of Bitcoin in Australia to date (given the absence of Australia-based exchanges and that very few Australian merchants accept bitcoins or any other virtual currency), risks to the payments system appear to be limited,” Halperin wrote.
The RBA calculated that the rate of bitcoin trades via the formerly dominant Mt.Gox exchange are “relatively small” at an average daily turnover of 1710 bitcoin units worth around $100,000 per day in 2013.
That compares with daily trades worth roughly US6.6 million (A$7.1 million) recorded in the US.
The agency expects the volatility of the currency – and the dampening effect this has on consumer confidence – will keep adoption at manageable levels for the foreseeable future.