Last Monday, the International Monetary Fund (IMF) had published a report regarding crypto-assets like the (CBDCs) and the global stablecoins (GSCs). Furthermore, the IMF had also hosted a virtual panel that has discussed digital currencies and cross-border payments with Federal Reserve Chair Jerome Powell.
The Fed Chair states that as far as a US-issued CBDC is concerned, it is “more important to get it right than to be first.”
The IMF had held a virtual panel that discussed the digital currencies and cross-border payments last Monday morning. The board has been hosted by the IMF managing director in Washington, DC, Kristalina Georgieva, and the Federal Reserve Chair Jerome Powell joined. Reports say that Powell talked about the impact of a US-issued CBDC and its effect on financial stability.
“We do think it’s more important to get it right than to be first and getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks,” Powell said throughout the panel discussion last Monday. “Also recognize the important trade-offs that have to be thought through carefully.”
On that same day, the IMF had published a report highlighting that the CBDCs can be beneficial; however, it cannot cast a net on every money issue. For example, CBDCs may not aid if a local currency is a low unit of account, the IMF report emphasizes.
Furthermore, a currency substitution “depends on the degree of monetary stability and other country circumstances, including legal frameworks and regulation.”
The report also states that the emergence of the CBDCs and GSCs will require more analysis. The researchers said that the countries that will invoke a CBDC should consider whether or not the nonresidents can use their CBDC.
“Authorities will also need to assess whether restrictions on payments in CBDCs are consistent with countries’ obligations under international and bilateral treaties, including the IMF’s Articles of Agreement,” the IMF report asserts.
“For countries that adopt GSCs issued by Big Tech platforms, they will have a strong interest in ensuring that the GSC arrangement has robust governance and risk management,” the IMF report continues.
The IMF researchers declare that even though there are unknown risks associated with crypto assets like GSCs and CBDCs, the pace of the digital acceleration is continuously revolutionizing.
The researchers continue by adding:
“As the pace of digitalization accelerates, the landscape of international finance will likely be in a state of flux. Payments and financial services provision will likely become increasingly integrated with the digital economy organized through the internet and mobile phones.”
The IMF report named “Digital Money Across Borders: Macro-Financial Implications” displays the organization and policymakers, including Powell, that are still leery about how to proceed by managing crypto assets. The study and virtual panel showed that the government leaders are still very much in the dark when it comes to blockchain technology and can’t further figure out how to control the industry.
Before the panel of policymakers that featured Kristalina Georgieva and Jerome Powell, another board has been held by the IMF that had been conversing about the private sector that lends a hand with the CBDC and GSC tokens. The personal sector panel had involved Celo CEO Rene Reinsberg, Mastercard senior VP Rory Macfarquhar, Ecurrency CEO Jonathan Dharmapalan, and Stellar CEO Denelle Dixon.
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