BIS officials say that the adaptability and openness of crypto are key to an ideal financial system.
Central bank digital currencies (CBDC) are seen by governments all over the world as a way to improve the current ecosystem of fiat currencies. A report from the International Monetary Fund (IMF) says that a strong financial ecosystem needs both the technical skills of cryptocurrencies and the trust of central banks.
Agustn Carstens, deputy managing director of the IMF, and BIS executives Jon Frost and Hyun Song Shin are credited with the publication.It says that digital technologies promise a bright future for the monetary system.
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A BIS study from June showed that cryptocurrencies are better than fiat ecosystems at reaching the high-level goals of a future monetary system.
Executives from the BIS pointed out that bottlenecks in decentralised finance (DeFi) and the fact that cryptocurrencies are based on volatile assets are two of the biggest problems that are stopping cryptocurrencies from becoming widely used.
The post pointed out that both wholesale and retail CBDCs may be able to get useful features from the crypto ecosystem:
“The private sector can help make a rich and diverse monetary ecosystem by embracing the core of trust that central bank money provides.”
It also suggested that central banks use innovations like tokenization to let people buy things with more than one fiat currency. This would be good for both merchants and customers.
India and the IMF are collaborating on a crypto consultation paper.
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The IMF’s gloomy forecast of a global economic slowdown caused the crypto markets to worry about a coming recession. Asian Trade said before that Bitcoin (BTC) markets are likely to get better when there is less uncertainty about the economy and less political tension.
But the IMF said that the liquidations, bankruptcies, and losses at big companies like Celsius, Three Arrows Capital, and Voyager Digital Holdings had only a small effect on traditional financial systems.
