IMF Says Crypto and Central Banks Can Set the Stage for a Rich and Diverse Monetary Ecosystem – Here’s How
The International Monetary Fund (IMF) says that cooperation between central banks and crypto-technology can create an innovative and efficient monetary ecosystem.
In a new report written by Bank for International Settlements (BIS) executives, the IMF says that the technology behind digital assets and the public’s trust in central banks can combine to set the stage for the future of monetary policy.
“We argue that the monetary system of the future should take advantage of the new technical capabilities demonstrated by crypto, but be rooted in the trust provided by central banks (BIS 2022).
In other words, any legitimate transaction that can be done with crypto can be better accomplished with central bank money. Central bank digital currencies (CBDC) and other public infrastructure can support a rich and diverse monetary ecosystem that supports innovation in the public interest.”
According to the IMF, while the technology behind cryptoassets is remarkable, the industry has many flaws, such as extreme price volatility and a lack of regulation and scalability. The IMF says that central banks can help solve these problems.
“Crypto is neither stable nor efficient. It is a largely unregulated sector and participants are not accountable to society. Frequent fraud, theft and fraud have raised serious concerns about market integrity.
Crypto has introduced us to the possibilities of innovation. Nevertheless, the most useful elements must be put on a more solid foundation. By adopting new technical possibilities [by] By building on a core of trust, central bank money can provide the foundation for a rich and diverse monetary ecosystem that is scalable and designed with the public interest in mind.”
The report mentions real estate tokenization and retail purchases as examples of how central banks can use digital assets.
“First, wholesale CBDCs (central bank digital assets) – a superior representation of central bank money for use exclusively by banks and other trusted institutions – can offer new technical opportunities…
For example, the buyer and seller of a house can agree in advance that the tokenized payment and the tokenized property transfer must be simultaneous…
Second, at the retail level, CBDCs have great potential, along with their first cousins, fast payment systems. Retail CBDC will act as digital cash available to households and businesses, with services provided by private companies.
Central bank-operated retail rapid payment systems are similar to retail CBDCs in that they offer this common platform while ensuring that services are fully connected. Both promise to lower payment costs and enable financial inclusion.”
Don’t Miss a Beat – Subscribe to get crypto email alerts delivered straight to your inbox
Check price action
Follow us on TwitterFacebook and Telegram
Surf The Daily Hodl Mix
 
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and trades are at your own risk and any losses you incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured image: Shutterstock/prodigital art/Natalia Siiatovskaia