With recent conversations about digital currencies issued by central banks (known as CBDC), the International Monetary Fund (IMF) is examining its role in the future of sovereign digital currencies, according to Bitcoinist.
IMF considers pros and cons
In an analysis published on the IMF blog in early December, the IMF discussed its role in the CBDC discussion, as well as the pros and cons of sovereign digital currencies.
According to the blog, the IMF has identified three areas in which the IMF can help nations launch their CBDC. An excerpt from the publication reveals:
“The IMF can help in three ways: by providing information to the debate, bringing together the relevant parties to discuss and helping countries to develop guidelines. Since the CBDC is a new issue, the IMF is active in the first two areas, but is gradually moving to the third area as countries consider options and seek advice. ”
According to the publication, some of these strengths include reducing the cost of operations and promoting financial inclusion. The IMF also believes that CBDCs will form a "robust counterattack" against private cryptocurrencies.
For the IMF, the adoption of these private projects could present risks to the integrity of the nations' financial infrastructure. Several members of the main financial circles voted against projects like Libra, citing similar concerns.
Agustín Carsten, head of the Bank for International Settlements (BPI), said central banks are in danger of losing their relevance to cryptocurrencies. A former president of the central bank of China argued earlier this year that the Pound would work better under the control of the IMF.
Was 2020 the year of wars between CBDC?
Like other CBDC voices, the IMF has linked the increase in activity in sovereign digital currencies with the announcement of the Libra project. Since the launch of white paper of Libra and the inauguration of the Association of Libra, some central banks have begun to accelerate their plans with digital currencies.
While the United States has been left out of the CBDC debate so far, several European countries are organizing efforts to launch a digital currency for the entire region in hopes of not allowing a Chinese monopoly on the CBDC stage.