Could Cryptocurrencies ever Replace Traditional Money? What will Happen during a Market Crisis?
A new report from the International Monetary Fund says that digital currencies and fiat-pegged cryptocurrencies are becoming more popular and are able to supplant traditional money..
IN document the authors talk about the fact that large companies are beginning to compete with banks and payment systems, and digital forms of money are increasingly being placed in the wallets of consumers and the heads of politicians. Therefore, bank deposits and fiat are struggling with funds held electronically and tied to individual currencies or baskets..
The IMF experts predict that new forms of value transfer may begin to compete with traditional money and deposits, gradually replacing them. They explain this by the fact that stablecoins can be more convenient as a means of payment and represent an investment fund that guarantees the repayment of par.
Therefore, the authors of the report recommend that banks take measures to combat digital currencies by offering better services or similar products. Adding that this does not exclude problems in the future work of the banking sector.
They also suggest considering new payment options such as i-money. – analogue of electronic money with the function of repayment of changes in value, similar to shares. As an example, they cite the Libra Facebook stablecoin, tied to a basket of fiat and government bonds..
The IMF notes the important role of central banks in the further development of the financial system. The Central Bank can establish the rules for the functioning of electronic money and regulate the level of pressure on commercial banks. At the same time, they can offer individual digital currency providers access to their reserves or issue one of the CBDC options for settlements.
text: Ivan Malichenko, photo: sputnik