Digital currencies on the rise - IMF open for cooperation
Digital currencies on the rise - IMF open for cooperationDigital currencies on the rise - IMF open for cooperationEU Regulierungen Regeln Kryptwährungen Digitale Assets

The International Monetary Fund (IMF) as well as the World Bank argued on Friday that projects such as the United States’ digital dollar could support global development. Moreover, they also assume that digital currencies also (CBDC) would also have cross-border benefits.

IMF and World Bank support digital currencies

The IMF and World Bank, together with the BIS (Bank for International Settlements), have published a paper in which they see great advantages for digital currencies. The paper states that digital currencies would have a significant advantage over expensive and delayed money transfer services. This paper turns the slow and overpriced money transfer service on its head.

Indermit Gill, World Bank Group Vice President for Equitable Growth, Finance and Institutions said:

Faster, cheaper, transparent and more inclusive cross-border payment services would benefit citizens, businesses and economies worldwide.

Moreover, he added that technology would thus allow Bank of England Deputy Governor Sir Jon Cunliffe to turn over a new leaf when it comes to strengthening payment systems.

As the G20 summit in Italy brought together finance ministers and central bankers from all the top nations around the world, this paper was designed specifically for that purpose. It envisions a central bank digital currency environment. This allows currencies to be exchanged quickly and easily at any time. In addition, digital currencies can provide the same services that central banks provide swap lines to not only large corporations around the world, but also to retail customers.

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US Federal Reserve already has several designs for the digital dollar

It has been revealed that the US Federal Reserve is already looking at various designs for a digital dollar. However, it is unclear so far whether such one has been adopted, as a Fed official doubted its usefulness just recently. He also claims that <a href=”” target=”_self” rel=”noopener”>Stablecoins would be more useful to the private sector when it comes to cross-border payments.

The FED’s vice chairman of supervision said:

Bad actors could try to steal CBDC, compromise the CBDC network or target non-public information about CBDC holders.

Digital currency risks

However, the G20 study also addresses the risks of adopting a digital currency. For example, the monetary independence of some central banks could be threatened if there are reduced barriers to currency substitution of exchange rate restrictions. In addition, easy and cross-border transactions could increase a risk of runs on local banking sectors and currencies. In particular, the risks could be very apparent for at-risk and emerging market economies. Moreover, it notes that regulatory and policy concerns will require lots of work.

Still, the point of the paper is that the primary goal is to study the international impact through this technology. Of course, it is up to each country to weigh the pros and cons of such an expenditure. The report also states that CBDCs have the potential to increase the efficiency of global payments.

Later this summer, the Federal Reserve will decide whether to make the digital dollar idea public. The European Central Bank (ECB) is also set to decide whether to approve the digital euro. In China, some trial runs have already been conducted with the digital yuan.

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Overall, about 90 percent of all central banks are currently exploring whether to issue a digital version of their currency. Thus, this paper is of particular importance and we assume that sooner or later there will be digital currencies in every country. Even the states cannot close their minds to the technology, even if they wanted to.

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