Eswar Prasad is the Tolani Senior Professor of Trade Policy at Cornell University. He is also a Senior Fellow at the Brookings Institution, where he holds the New Century Chair in International Economics, and a Research Associate at the National Bureau of Economic Research. He was previously chief of the Financial Studies Division in the International Monetary Fund's Research Department and, before that, was the head of the IMF's China Division.

Prasad’s latest book is Gaining Currency: The Rise of the Renminbi (Oxford University Press, 2016). He is also the author of The Dollar Trap: How the U.S. Dollar Tightened Its Grip on Global Finance (Princeton University Press, 2014) and Emerging Markets: Resilience and Growth Amid Global Turmoil (with M. Ayhan Kose; Brookings Institution Press, 2010). His op-ed articles have appeared in the Financial Times, Foreign Policy, Harvard Business Review, International Herald Tribune, New York Times, Wall Street Journal, and Washington Post.

Introduction:

Bitcoin and other digital currencies are drawing increasing attention around the world. While Bitcoin is not going to replace the dollar or other official currencies anytime soon, the rise of digital currencies poses challenges and opportunities for central banks around the world. Are we at the beginning of an era in which paper currency is (finally) obsolete? Should central banks create their own e-currencies? Do digital currencies create financial stability risks? How should central banks regulate them? Is the central bank’s franchise at risk? Could the spread of digital currencies influence the conduct of monetary policies, the efficacy of capital controls, the nature of cross-border capital flows? This report provides a framework for thinking through these issues and reviews how different central banks are responding to the changes and challenges they face.

Source: National School of Development