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IMF Official Suggests The Central Banks to Compete With Cryptocurrencies

IMF | International Monetary Fund | IMF to central banks | Compete with cryptocurrencies | make fiat currency attractive | Cryptocurrency updates

 

An International Monetary Fund’s official made a suggestion to the central banks to make fiat currencies more attractive to for the digital age. He said that such a move would be a good way to out away potential competition from cryptocurrencies.

The Director of The Monetary and Capital Markets Department, through an article on Thursday pointed out several suggestions. The article boasts the tagline “Crypto assets may one day reduce demand for central bank money”.  He argues that central banks may want to consider adopting some of the concepts in order to “forestall the competitive pressure crypto assets may exert on fiat currencies”. He urged central banks to work towards making fiat currencies more stable as units of accounts, saying,

 “The best response by central banks [to crypto] is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.”

The deputy director suggested that tightening regulation could provide a boost for central banks.

“Second, government authorities should regulate the use of crypto assets to prevent regulatory arbitrage and any unfair competitive advantage crypto assets may derive from lighter regulation. That means rigorously applying measures to prevent money laundering and the financing of terrorism, strengthening consumer protection, and effectively taxing crypto transactions.”

He also pointed to the idea of central banks creating their own digitized assets that could be exchanged in a peer-to-peer fashion. The article went on to say,

“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, much as crypto assets are,” 

Cryptocurrencies have been on the receiving end of sharp criticisms from across the board including IMF officials. Now some central banks are said to be looking at the effectiveness of these proposals. A Hong Kong’s Monetary Authority’s official has just stated this week that, despite researching on the area they do not plan to launch a digital currency.

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