Cryptocurrencies from an Austrian Perspective

69 Pages Posted: 12 Apr 2017 Last revised: 19 May 2017

See all articles by Alistair Milne

Alistair Milne

Loughborough University - School of Business and Economics

Date Written: May 18, 2017


Placing bank and fiat money off balance sheet, using the distributed transaction technologies of Bitcoin and other cryptocurrencies, avoids the need for centralised payment settlement (in central bank money). Just like earlier proposals for ‘narrow-banking’ or 100-percent reserving this prevents bank failure disrupting monetary transactions. Unlike those earlier proposals banks can continue using fractional reserving with ‘x-percent reserving’ offering fine-grained control of unsustainable money and credit expansions. This reform helps achieve monetary outcomes desired by the Austrian school of economics: reducing the need for bank regulation, lender of last resort and bank bail-out.

Keywords: 100-percent reserved banking, bank payments, bank reserves, Bitcoin, blockchain, central counterparties, the Chicago plan, clearing and settlement, credit money, cryptography, commodity money, digital currency, distributed ledgers, electronic currency, fiat money, fiduciary media

JEL Classification: B53, E42, G21

Suggested Citation

Milne, Alistair K. L., Cryptocurrencies from an Austrian Perspective (May 18, 2017). Available at SSRN: or

Alistair K. L. Milne (Contact Author)

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leicestershire, LE11 3TU
United Kingdom

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