What will central banks do when tokens replace money?

WITH mainstream investment products increasingly finding a second home on the blockchain, it’s a good time to ask what role central banks would play if everything they have learned while policing double-entry bookkeeping over the last 350 years becomes irrelevant.

The techno-anarchist vision behind cryptocurrencies such as Bitcoin was to free the financial well-being of individuals from the clutches of large custodial institutions – and the monetary mandarins supervising them. That utopia never materialised, but the embrace of the underlying technology by traditional banks and asset managers has taken off.

There’s plenty of appetite for it. Now that apps like Robinhood have made investing super easy, Millennials and Gen Z refuse to accept that private banks will hawk unlisted unicorns to their wealthy parents, but not to the actual users of the products and services of these new-age startups. Why should lumpiness of private equity or private credit get in the way of mass access?