How cryptocurrencies changed 21st-century monetary policy

Source: CritpoTendencia Original Title: How Cryptocurrencies Changed 21st Century Monetary Policy Original Link: A silent but profound change.

Cryptocurrencies and stablecoins began as technological niches.

Today, they are transforming global money processes. Governments and central banks face a new challenge. They no longer have total control over the creation and flow of money.

The rise of stablecoins and their growing influence

Stablecoins are gaining ground as a means of exchange and store of value. According to the Bank for International Settlements (BIS), their global market capitalization will exceed hundreds of billions in 2025.

That significant growth is beginning to compete with bank deposits. This competition threatens the traditional base of bank financing.

Why stablecoins weaken monetary control

According to the BIS, stablecoins do not meet three key requirements of sound money: uniqueness, elasticity, and integrity. They function as private instruments, not as money issued by a central bank. Therefore, they do not guarantee flexible liquidity in crises, nor reliable institutional backing.

Moreover, their adoption can undermine the traditional transmission of monetary policy.

For example: many savers may prefer stablecoins over deposits. That reduces the base on which central banks control the money supply.

Effects in emerging countries and risks to monetary sovereignty

A Moody’s Ratings report warns that cryptonization can erode monetary policy in vulnerable economies.

If citizens adopt stablecoins or cryptos, central banks could lose control over exchange rates, inflation, and deposits.

That loss of control threatens macroeconomic stability, even more so in contexts with institutional weakness or weak regulation.

What alternatives are central banks developing? CBDC and institutional tokenization

In response, many regulators are proposing central bank digital currencies (CBDC).

Additionally, the BIS suggests a hybrid system: tokenized fiat money, tokenized public and private assets, and consolidated reserves.

This framework seeks to combine efficiency, traceability, and institutional trust.

A recent study proposes a hybrid system where private stablecoins coexist with central bank money. This architecture allows for stability, liquidity, and regulatory control.

Thus, central banks could regain part of their role, though under new rules.

Interaction between traditional monetary policy and the crypto market

It’s not just stablecoins putting pressure on the monetary system. Volatile cryptocurrencies also react to changes in traditional monetary policy.

For example, when a central bank raises rates, that shock will affect cryptoassets and stablecoins differently. This creates a duality: monetary policy continues to influence, though with less power, some of the digital money.

What does this change mean for the 21st century? A new monetary paradigm

Money no longer depends exclusively on central banks.

Stablecoins and private cryptocurrencies open up a parallel layer of global liquidity. This new scenario erodes traditional monetary sovereignty.

To maintain control, regulators must react. Regulation, CBDCs, and institutional tokenization seem to be key strategies.

The result: a hybrid, global, and diverse system. This system can offer efficiency, financial inclusion, and resilience… if it coexists with stability and supervision.

Conclusion: urgency of institutional adaptation

Cryptocurrencies and stablecoins are emerging as disruptive forces. They are changing who controls money, how it flows, and how it is regulated.

Central banks must reinvent their tools.

The 21st century demands clear policies, strong regulations, and hybrid frameworks. Otherwise, they will lose influence over global liquidity.