TUGAS TUTON 1

BAHASA INGGRIS NIAGA

DEWI PUSPITA SARI

(048360375)

PROGRAM STUDI MANAJEMEN

FAKULTAS EKONOMI

UNIVERSITAS TERBUKA

2024
Please choose one of the topics below. Then, write an essay consisting of 3 paragraph. Elaborate
your own opinion with the references related to the topic that you choose.

1. With the increasing interest in and adoption of cryptocurrencies, some argue that
the role of central banks could diminish in the future. How might the rise of
decentralized digital currencies impact the traditional functions of central banks,
such as controlling inflation, regulating the banking sector, and ensuring financial
stability? Explain your reasoning.

Answer

The rise of decentralized digital currencies has the impact to the traditional role of central banks.
Mass adoption by the public is key in determining the extent to which decentralized digital
currencies can shift the role of central banks. The more people use digital currencies as their
primary means of payment, the more likely it is that central banks will lose control over the
payment and money circulation system. In addition, regulation will also play an important role in
determining the role of central banks in the future. If regulations allow and even support the use
of decentralized digital currencies, then central banks may need to adapt to the change.

In controlling inflation, central banks usually use monetary policy to regulate money supply and
interest rates. However, with decentralized digital currencies, central banks may face challenges
in controlling money supply due to their lack of direct involvement in the distribution of such
digital currencies. For example, Bitcoin, as one of the decentralized digital currencies, is not
controlled by a single entity such as a central bank, making it difficult for central banks to
influence the value or supply of Bitcoin directly. Moreover, in regulating the banking sector,
central banks usually have a role in supervising and regulating commercial banks to ensure the
stability of the financial system.

However, with the development of blockchain technology that supports decentralized digital
currencies, the emergence of more decentralized financial systems such as DeFi (Decentralized
Finance) has reduced reliance on traditional banks. This can reduce the role of central banks in
regulating the banking sector, as more financial activity can occur outside of their control. Also,
the stability of the value of digital currencies will also affect the role of central banks. If
decentralized digital currencies experience high volatility, central banks may still have a role in
providing a more stable and reliable currency for the public. However, if decentralized digital
currencies can achieve sufficient value stability, then central banks may face further pressure to
maintain their relevance.
The rise of decentralized digital currencies is having a major impact on the traditional role of
central banks. Although central banks still have a vital role in monetary policy and financial
stability, they will have to adjust their strategies to meet the challenges of increasingly
decentralized financial technology developments.

Reference

Siti Era Mardiani. (2023). Bahasa Inggris Niaga. Tangerang Selatan: Universitas Terbuka.