The International Monetary Fund (IMF) should boost its resources to “monitor, advise on, and help manage this far-reaching and complex transition” to digital money. The agency said about it in a policy paper.
The IMF said digital money could make payments faster, cheaper and more accessible.
“But to reap the full benefits and manage risks, policymakers must step up, and view this transformation with perspective as implications are wide-ranging and profound” the IMF said.
“Governments, however, need to step up to provide these services, and leverage new digital forms of money while preserving stability, efficiency, equality, and environmental sustainability”.
According to IMF experts, policymakers and regulators have three main challenges to address in the transformation process:
– To provide credibility to the new form of money and protect consumers
– Not to undermine the stability of the international monetary system.
“The Fund has a critical role to play to help its members harness the benefits and manage the risks of digital money,” the institution said.
The IMF emphasised that it has the capacity, skills and mandate to do so. But the fund needs to quickly ramp up the resources to this area and increase coordination with other institutions, according to the organisation’s experts. In the paper they analysed the differences between CBDCs, stablecoins, e-money and crypto assets, including Bitcoin (BTC):
“While different types of digital money are considered, this paper does not take a stand on which form may predominate.”
Earlier, IMF Director of Monetary Policy and Capital Markets Tobias Adrian and General Counsel Rhoda Weeks-Brown said that any attempt to use crypto assets as national currencies would be risky.
In June this year, the Salvadoran authorities passed a bill recognising Bitcoin as a legal tender in the country. The IMF warned that this could entail a number of risks and regulatory problems.
The IMF considers itself a key player in the commitment phase during the transition to a digital money world. They recognised both the many benefits of cryptocurrencies as well as a number of risks associated with their adoption at the national level. At this point, it plans to increase its resource allocation to this area. This will help to work out the pros and cons at a higher level and gradually derive a basis for the safe use of cryptocurrency.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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