The International Monetary Fund (IMF) said that Central Bank Digital Currencies (CBDCs) would not provide all the solutions to the world’s economy. According to a report published by the IMF on the 19th of October, countries may adopt digital currencies to gain more control over their monetary policy. Apart from that, the creation of digital currencies is not a solution to the world’s challenges.
“Overall, the paper finds that CBDCs do not qualitatively change the economic forces that lead to the international use of currencies, as they are only digital forms of existing fiat currencies but quantitatively, they could reinforce the incentives behind currency substitution and currency internationalization.”
The discussions on the CBDCs occurred during the IMF’s annual meeting on the 19th of October. Among the attendees was the US Federal Reserve Chair Jerome Powell. At the meeting, Powell addressed cross-border payments and digital currencies.
Powell’s attendance triggered comments among crypto analysts. A Bitcoin analyst said that the Federal Reserve’s attendance shows the “recognition of the importance of digital currencies.”
Already, China has processed 1.1 billion yuan worth of transactions. The People’s Bank of China (PBOC) revealed that the CBDC had been used for different transactions, including bill payments.
According to the PBOC’s deputy governor Fan Yifei, China has used the CBDC to process 3.13 million transactions, such as bar-code payments. In addition, tests will be conducted for the digital yuan at the 2022 Winter Olympics.