IMF Predicts Central Banks to Issue Digital Currencies
The IMF believes that some central banks are going to issue digital currencies, based on responses to a survey issued jointly with the World Bank.
According to the full paper, the IMF and World Bank conducted a survey on fintech that solicited answers from financial institutions within all member countries, and has based its conclusions in part upon the 96 received responses.
According to the paper, several central banks in different countries are considering implementing some form of Central Bank Digital Currency (CBDC). Uruguay has reportedly launched a CBDC pilot program already, while the Bahamas, China, Eastern Caribbean Currency Union, Sweden and Ukraine are “on the verge” of testing their systems.
Additionally, a number of central banks have reportedly been conducting research on CBDC’s potential impact on financial stability, the structure of the banking sector, entry of nonbank financial institutions, and monetary policy transmission.
Motivation for offering a CBDC varies, per the report. Both emerging economies as well as developed economies are said to be considering CBDC options, with the latter seeking to provide an alternative to cash as its frequency of use dwindles. For emerging economies in developing countries, on the other hand, the main upshot of a CBDC would be reducing banking costs, as well as potentially making banks more available to unbanked citizens.
One similarity, however, is that most central banks are not interested in issuing an entirely anonymous CBDC, as the institutions want transactions to ultimately be traceable by authorities when necessary. However, some of these institutions are considering portioning off a subset of tokens reserved for large holdings and transactions, and only making those ones traceable.
As previously reported by Cointelegraph, the conservative economist Stephen Moore has recently joined a project to make a Federal Reserve-like entity for cryptocurrencies. The project, Decentral, is a purported attempt to regulate cryptocurrency supply in order to reduce volatility in the crypto market.