IMF: central banks must coexist with private currencies
Will central bank digital currencies (MNBCs) struggle to keep up with innovations driven by the private digital currency sector? This is what reports the International Monetary Fund (IMF), which believes that salvation will come from a symbiotic relationship between these areas …
Central banks and private digital currencies: competitors?
In a blog post published in recent days , the IMF starts from an observation: central banks tend to move more slowly than the private sector, but the latter is in turmoil at the moment. FinTech startups and cryptocurrencies grow more flexibly than central bank digital currencies (MNBCs) :
„Money today or even tomorrow will probably not meet the needs of the next.“ Keeping pace with technological change, user needs and private sector competitors will be difficult for central banks . “
The latter are indeed encumbered with regulatory needs and a certain administrative stiffness that does not embarrass startups in the sector. Hence this idea of the IMF: central banks must take some lessons from the tech giants:
“Central banks will therefore have to become more like Apple or Microsoft in order to continue to offer MNBCs that explore the frontiers of technology and remain in users‘ wallets as the predominant form of digital currency. “
Will MNBCs and private initiatives coexist?
To meet these new expectations, the IMF believes that central banks will have no other choice than to cohabit:
“The solution comes from a fundamentally symbiotic relationship: that is, giving the option to buy back private money for perfectly secure and liquid public money , whether it is banknotes or coins, or central bank reserves held by selected banks. “
The IMF thus outlines the beginning of a scenario where all the players in the sector will be forced to balance themselves naturally:
“A system with only private currencies would be far too risky. And a system having only digital currency central bank may miss important innovations s . Each form of money therefore relies on the other to deliver the dual monetary system that currently exists – it’s a balance that suits us well. „