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Bitcoin Forces Global Policy Trilemma on Central Banks

2025-07-10 06:54:06

Bitcoin Forces Global Policy Trilemma on Central Banks

Main Idea

Bitcoin is seen as a solution to fiat currency devaluation by central banks, with some countries adopting it as a reserve asset, while central banks are slow to embrace Bitcoin and are instead focusing on CBDCs.

Key Points

1. Bitcoin is viewed as a hedge against fiat currency devaluation caused by central bank money printing, as stated by analysts like Willy Woo.

2. Countries like El Salvador and Bhutan have officially adopted Bitcoin as a reserve asset, holding significant amounts.

3. Central banks are hesitant to adopt Bitcoin due to concerns over losing control of the money supply and are instead developing CBDCs as controllable digital alternatives.

4. Regulated crypto trading is allowed in many countries, but crypto payments are often restricted to prevent circumvention of the banking system.

5. Analysts and crypto entrepreneurs predict that the shift away from fiat currencies will continue as Bitcoin's resistance to devaluation becomes more attractive.

Description

“Bitcoin has effectively cornered the world’s central banks, and there is no way out,” said author Adam Livingston on July 9. He added that the banks face an “unprecedented challenge,” in that they cannot print Bitcoin to defend their currency, which creates a “policy trilemma.” Policymakers essentially have three choices: they can raise interest rates to defend the currency through higher yields, deplete foreign currency reserves to support the domestic currency, or they can “join the migration...

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