Bank of Canada Paper: Bitcoin Adoption Could Stabilize Price

The central bank of Canada has published a new working paper that suggests its researchers believe digital currency exchange rates will become less volatile should adoption increase.
Penned by researchers Wilko Bolt (of the central bank of The Netherlands) and Maarten RC van Oordt (of the Bank of Canada’s Financial Stability Department), the paper offers a possible “economic framework” for exchange rate analysis. Published on 18th August, it further represents the latest work from a major central bank, following growing interest from this segment of the financial community in recent months.
The authors explore factors influencing digital currency exchange rates, which they write include existing demand for payments, the day-to-day moves of market speculators and the belief among some buyers about future mainstream adoption.
Ultimately, they conclude major price swings brought on by traders could subside if digital currencies see broader use for payments.
The authors note:

This post was published at Coin Desk on August 31, 2016.

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