The Gaidar Forum-2019: An Expert Discussion – “Cryptocurrencies: What Does the Economic Theory Say?” – was Held

In his opening address, Pavel Trunin, Moderator of the Meeting, Head of the Center for Macroeconomics and Finance, the Gaidar Institute stressed that the domain of cryptocurrencies was of interest not only to dealers, but the academic community, as well. Pavel Trunin called on the participants in the session to discuss the specifics of cryptocurrencies in terms of the economic theory.

The key report was delivered by Yelena Sinelnikova, Senior Researcher of the Center for Central Bank Studies, the RANEPA. In her report, Yelena Sinelnikova highlighted the issues related to difficulties in identification of cryptocurrencies and attribution of cryptocurrencies to traditional economic categories of “funds” or “assets”. Also, the speaker touched upon the consequences of emergence of cryptocurrencies for the monetary policy, as well as the prospect of issuing by central banks of their own digital currencies.

One can get familiar with the presentation to the report here.

In his report, Alexei Moiseyev, Deputy Finance Minister of the Russian Federation noted that in their current form cryprocurrencies were not actually currencies and pointed to the fact that the anonymity of cryptocurrencies was no longer their integral parameter. The speaker said that regulators all over the world would take efforts to do away with it in future. Also, Alexei Moiseyev described cryptocurrencies as an instrument for crowdfunding and called the emergence of ICO a response of the system to toughening of the IPO regulation. According to А. Moiseyev, ICO may be more advantageous for small companies as it suggests among other things a simplified regulation of smart-contracts.

Andrei Belykh, Head of the Latest History and Media Department, the RANEPA compared cryptocurrencies with private funds which became available thanks to the new technology. The speaker said that cryptocurrencies emerged because there was market demand for anonymous settlements beyond the control of central banks and the prospects of development of cryptocurrencies would be determined by conveniences offered by such currencies as compared to other forms of settlements.

In his report, Artem Genkin, President of the ANP Center for Protection of Depositors and Investors touched upon the regularity of emergence and the rate of proliferation of cryptocurrencies and noted that cryptocurrencies would permit to reduce costs and promote efficiency of transactions, that is, provide a technical solution to existing economic challenges.

According to Konstantin Kurbatov, Managing Director of the BankEx Blockchain Platform, “we are at the initial stage of introduction of the technology”, an exponential phase of development of the cryptocurrency market, so it is premature to make any conclusion regarding their prospects. Konstantin Kurbatov stressed that blockchain would help solve the problem of confidence between counterparties. In addition, a payment and transfer of valuables take place in the same medium which situation excludes intermediaries from the transaction process (that is, judicial and bank intermediaries). According to Konstantin Kurbatov, cryptocurrencies will definitely supplement our world and make it more diversified.

Reimo Zhuks, Advisor to the Central Bank of Sweden spoke about the eKrona project, a digital currency of the Central Bank which was to be issued soon. The interest of the Swedish monetary authorities to digital currencies can be explained by a protracted and large-scale reduction of demand on cash funds on the part of the Swedish population; it is a kind of “response to individuals’ modern needs”. Reimo Zhuks pointed out that one should not forget that the main objective of a central bank was to underpin the purchasing power of the national currency.

Alexei Kiselev, Head of the Department of Analysis and Forecasting of the Central Bank of the Russian Federation expressed an opinion that digital currencies of central banks represented a response of monetary authorities to the requests of the market. Alexei Kiselev underlined that central banks’ digital currencies would meet demand on cash in places which had no commercial banks because of their territorial remoteness.

Summing up the results of the session, Pavel Trunin thanked experts for the interesting discussion and called on the participants to gather again to discuss cryptocurrencies at Gaidar forums in future.