[URSpider94]

I'm not sure I buy the premise of this article. The supply of Bitcoin in the market is not directly related to the mining rate (the "constant supply" the author refers to) -- instead, it depends on how many people are looking to trade Bitcoin at any given time.

Monetary policy is a mechanism to control long-term value of currency, for example to limit inflation or maintain a certain exchange rate with a foreign trade partner. It's not intended to (nor is it able to) damp out short-term fluctuations in foreign exchange markets.

[seliopou]

To add, what you're touching on in your response is the "Impossible Trinity" of monetary policy[0][1], which states that any two of the following three options are compatible, but it's impossible to have all three at the same time: a fixed exchange rate, free capital movement, and an independent monetary policy. It seems as though at the start Bitcoin picked one (free capital movement) and only recently has realized that it left something on the table. And a very important something, at that.

[0]: http://en.wikipedia.org/wiki/Impossible_trinity

[1]: http://www.nytimes.com/2010/07/11/business/economy/11view.ht...

[lbradstreet]

Surely Bitcoin has an independent monetary policy, along with free capital movement.

The monetary policy follows the block reward (currently 25 BTC).

Of course with this monetary policy and free movement of capital, it is impossible to have a fixed exchange rate, but it does in fact have two out of the three.