During the last couple of months, numerous monetary regulatory agencies have turned their eyes towards the digital currency market. Now, reports indicate that the International Monetary Fund is advocating for central banks to introduce regulatory policies, while also encouraging innovation on the fiat market.
Based on this, the deputy director for the Monetary and Capital Markets Department of the IMF has outlined a couple of responses meant to lower the rivalry present between banks and digital currencies. With this in mind, he mentioned that: “Central banks should continue to strive to make fiat currencies better and more stable units of account.” To do so, central banks should introduce measures meant to discourage money laundering and terrorism financing, while also protecting consumers and taxing digital currency transactions.
An interesting suggestion for the creation a central bank-backed cryptocurrency has also been made. The reasoning behind this would be making banks more attractive for settlement purposes, while also making fiat more attractive for the digital age. The deputy director also stated that: ”For example, they could make central bank money user-friendly in the digital world by issuing digital tokens of their own to supplement physical cash and bank reserves. Such central bank digital currency could be exchanged, peer to peer in a decentralized manner, just as crypto assets are.”
The idea of bank-based crypto tokens is interesting to say the least. It showcases that the IMF is not against cryptocurrencies as a system, but rather the problem lies in who holds controls. Most coins are decentralized, which means that no central entity is responsible for its control and regulation, but rather the market as a whole and its intentions.
Additionally, fiat innovation can also be provided if banks introduce other systems, such as big data, machine learning and artificial intelligence.
The managing director of the IMF, Christine Lagarde agrees, as she believes that the main response towards the crypto market by banks should include efficient monetary policies alongside being open to innovation, fresh ideas and market demands, as worldwide economies actively evolve.
With this in mind, while the IMF is not planning to issue regulatory policies for the digital currency market in the near future, it is indeed advocating for banks to do so.
Based on everything that has been outlined so far, what are your thoughts on the IMF’s latest statements regarding cryptocurrencies, and the bank-based tokens? Let us know in the comment section.