(WP 2013-09) Virtual Currency and the Financial System: The Case of Bitcoin

Technological development and the increased use of the internet have led to the proliferation of virtual communities. Some of these communities have created and circulated their own currency for exchanging goods and services. Bitcoin is currently the most popular among these virtual or digital currencies and has been in news recently because of the wild fluctuations in its ‘value’ and also significant venture capital investment in entities associated with it.1 Bitcoin is relevant in several areas of the financial system and is therefore of interest to central banks, consumers and investors. Digital currencies are part of a broader group of virtual currencies that include credit card points, air miles, loyalty points and coupons (Chart 1). With the advent of the Internet, mobile devices and detailed consumer information, companies are increasingly using digital currencies as a marketing tool. As a result, there has been a sharp increase in the use of digital currencies, particularly for app-based coins and tokens, mobile coupons, and personal data exchanged for digital content. As these trends evolve, digital currencies have the potential to become more popular and compete with traditional currencies. This paper aims to provide some clarity in particular on Bitcoin, its role and potential future use in the financial system and the risks associated with this form of digital currency.. It will begin by providing a short introduction to the Bitcoin network as well as describe the benefits of allowing the Bitcoin network to develop and innovate. It will highlight concerns for consumers, policymakers and financial regulators. Next it will analyze the role that Bitcoin could play in the financial system. The paper will conclude by providing recommendations to address policymakers’ concerns while allowing for further innovation within the Bitcoin network. An initial comprehensive overview of this kind is absent from the existing literature. This paper intends to fill that gap in the literature

Does the Stock Market\u27s Equity Risk Premium Respond to Consumer Confidence or Is It the Other Way Around?

The increase in the equity risk premium during the 2007- 2009 Great Recession and the aging of the baby boomers in the United States have led analysts and financial industry experts to believe that risk aversion among stock investors has moved to a more-permanently higher range. If so, stocks would cease being an attractive asset class to be investing in for the future. In the past few years private investors have by and large shunned equities, just when stocks have become attractively priced and offer long-term potential for superior above-historical-average returns. Our empirical findings show that the recent increase in the equity risk premium (ERP) primarily reflects a temporary collapse in consumer confidence and that the ERP will mean revert once confidence returns. As long as consumer confidence in the sustainability of the economic recovery remains low, today\u27s elevated risk premium will persist. Once confidence starts to recover- as it has done after every recession since the 1960s- the required return premium among stock market investors also should diminish

Atypical pneumonia in adults in southern Africa

The true incidence of Legionella pneumophilia, Mycoplasma pneumoniae, Chlamydophila pneumoniae and Coxiella burnetti, the so-called atypical pathogens that cause adult community-acquired pneumonia in southern Africa, is unknown. Although there are a lack of community-based studies, hospital-based studies suggest that the incidence may be as high as 30% in patients admitted to, but not requiring, an intensive care unit. A lack of specific clinical features that differentiate atypical pathogens, plus the lack of reliable, simple diagnostics, compound the uncertainty regarding the contribution of atypical pathogens to the sum total of community-acquired pneumonia in southern Africa. Without reliable diagnostic tests, macrolide or azalide antibiotics are widely used for in-patients with pneumonia, potentially fuelling the rise of antibiotic resistance to macrolides in other bacteria

Signs of low frequency dispersions in disordered binary dielectric mixtures (50-50)

Dielectric relaxation in disordered dielectric mixtures are presented by emphasizing the interfacial polarization. The obtained results coincide with and cause confusion with those of the low frequency dispersion behavior. The considered systems are composed of two phases on two-dimensional square and triangular topological networks. We use the finite element method to calculate the effective dielectric permittivities of randomly generated structures. The dielectric relaxation phenomena together with the dielectric permittivity values at constant frequencies are investigated, and significant differences of the square and triangular topologies are observed. The frequency dependent properties of some of the generated structures are examined. We conclude that the topological disorder may lead to the normal or anomalous low frequency dispersion if the electrical properties of the phases are chosen properly, such that for ``slightly'' {\em reciprocal mixture}--when $\sigma_1\gg\sigma_2$, and $\epsilon_1<\epsilon_2$--normal, and while for ``extreme'' {\em reciprocal mixture}--when $\sigma_1\gg\sigma_2$, and $\epsilon_1\ll\epsilon_2$--anomalous low frequency dispersions are obtained. Finally, comparison with experimental data indicates that one can obtain valuable information from simulations when the material properties of the constituents are not available and of importance.Comment: 13 pages, 7 figure

Operant Acquisition of Marihuana by Women1

ABSTRAC

The Viscous Nonlinear Dynamics of Twist and Writhe

Exploiting the "natural" frame of space curves, we formulate an intrinsic dynamics of twisted elastic filaments in viscous fluids. A pair of coupled nonlinear equations describing the temporal evolution of the filament's complex curvature and twist density embodies the dynamic interplay of twist and writhe. These are used to illustrate a novel nonlinear phenomenon: ``geometric untwisting" of open filaments, whereby twisting strains relax through a transient writhing instability without performing axial rotation. This may explain certain experimentally observed motions of fibers of the bacterium B. subtilis [N.H. Mendelson, et al., J. Bacteriol. 177, 7060 (1995)].Comment: 9 pages, 4 figure

Effective Viscosity of Dilute Bacterial Suspensions: A Two-Dimensional Model

Suspensions of self-propelled particles are studied in the framework of two-dimensional (2D) Stokesean hydrodynamics. A formula is obtained for the effective viscosity of such suspensions in the limit of small concentrations. This formula includes the two terms that are found in the 2D version of Einstein's classical result for passive suspensions. To this, the main result of the paper is added, an additional term due to self-propulsion which depends on the physical and geometric properties of the active suspension. This term explains the experimental observation of a decrease in effective viscosity in active suspensions.Comment: 15 pages, 3 figures, submitted to Physical Biolog