• Dr. Anna

Currency Common Sense

Widespread adoption and stabilization of a currency for the long term requires a growing economic system and an underlying economic infrastructure to ensure its viability or realistic use as intended by its originators. Examples of world currencies for which trade is liquid and stable include the U.S. dollar, Japanese yen, and British pound. Not only are these currencies accepted for commercial trade among the countries’ citizens and enterprises without question, but the currencies are easily traded within transparent markets open to any investor. Backing these currencies are sovereign governments with rules of law, infrastructure, regulated banking systems and central bank oversight, among other features. The currencies are universally recognized as tender for the purposes of commercial transactions within large, relatively stable regulated macroeconomic systems.

Any currency system gains and retains its identity in the long term with a sufficiently scaled market that generates enough transactions to convey value and assure reliance on trust that transactions can be completed. Many await a firm definition and formation of the regulatory environment for cryptocurrencies and a better understanding of how these currencies will integrate with established global banking institutions, currencies, and the global economic system. A succinct summary of the current crypto environment appears in Forbes here.