Category Archives: central banks

Auto Added by WPeMatico

IMF Foresees Central Bank Crypto Coming

CBDC, IMF Foresees Central Bank Crypto Coming

The International Monetary Fund (IMF) has predicted that central bank digital currencies (CBDC), or state-backed crypto, would soon be a reality, with central banks already issuing them in the near future.

The report does seem to ignore that Venezuela at least has already released a CBDC, although of course, its legitimacy is highly in doubt, but it does recognize that several central banks in various countries throughout the world are already implementing some form of CBDC. It makes mention of the pilot program in Uruguay, and others like the Bahamas, China, Eastern Caribbean Currency Union, Sweden, and Ukraine, whom it says are “on the verge” of kicking off system trials.

The full paper described how the IMF, together with the World Bank, launched a fintech survey, seeking responses from member countries’ financial institutions and then basing off their conclusions in part from the responses received from 96 participating countries. This number does put it into a fairly broad global perspective.

The report as well talks about the research conducted by several central banks keen to learn more about CBDC’s potential impact on financial stability, as well as on the structure of the banking sector. The potential for non-bank financial institutions to enter and monetary policy transmission was also covered.

The findings show different motivations for a CBDC, with interest coming equally from developed economies as well as emerging ones. While developed countries seek to provide an alternative to cash as payment methods, especially as societies begin to go cashless, those trialing them in developing economies hope to reduce the costs of banking and tackling the issue of so-called unbanked populations.

A curious similarity is that none seek an anonymous CBDC as they all want these cryptos to be traceable by the state.

BitcoinNews.com is committed to unbiased news and upholding journalistic codes of ethics. For more information please read our Editorial Policy here.

Follow BitcoinNews.com on Twitter: @BitcoinNewsCom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Image Courtesy: Pixabay

The post IMF Foresees Central Bank Crypto Coming appeared first on BitcoinNews.com.

Singapore, Canada Central Banks Conduct First Cross Border Blockchain Digital Currency Exchange

Singapore, Canada Central Banks Conduct First Cross Border Blockchain Digital Currency Exchange

The Monetary Authority of Singapore (MAS) and the Bank of Canada have set the trend becoming the first central banks to use DLT for a digital cross border payment.

MAS linked up with its Canadian counterpart Project Jasper via its own pilot payment network Project UBin in a cooperative attempt to lower the cost of cross-border payments via blockchain, and also speeding up the process of transmission and reception.

Sopnendu Mohanty, MAS chief fintech officer, said that the two projects were following on from an ongoing collaboration between the two country’s central banks and commented: “Together, these projects have addressed many technical questions and brought the technology to a higher level of maturity.”

Scott Hendry, the Bank of Canada’s senior special director of financial technology said that forward planning for more cooperation between the banks was an essential ingredient for future success in lowering costs and enhancing efficiency in cross border payments.

“Only through continued collaboration and fundamental research will it be possible for this technology to mature and for policymakers to fully understand its potential.”

A senior financial specialist at the World Bank has released a paper which agrees that distributed ledger technology could help bring down remittance costs and improve cross-border payments compliance. The World bank blog also states the “industry is ripe for disruption“, citing DLT as being well positioned to make its mark.

One major area of concern expressed by the World Bank which was seen as a hurdle to the take up of DLT in this sector was a general distrust of such solutions due to industry concerns and misunderstanding regarding the nature of cryptocurrency, borne from the same technology.

 

Follow BitcoinNews.com on Twitter: @bitcoinnewscom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay

The post Singapore, Canada Central Banks Conduct First Cross Border Blockchain Digital Currency Exchange appeared first on BitcoinNews.com.

IMF Exec: Crypto Could Weaken Central Bank Power over Monetary Policy

The deputy director of the International Monetary Fund’s (IMF) monetary and capital markets department, Dong He, has shared his views on how global adoption of cryptocurrency could change the financial world. One of the biggest takeaways from Dong He’s analysis is that he thinks cryptocurrency could deprive central banks of their ability to carry out monetary policy.

Clearly, cryptocurrency is now on IMF’s radar based on Dong He’s analysis, and the sentiments of a pivotal player in the global financial system could bear implications on the industry.

Dong He says that cryptocurrency has an advantage over banks when it comes to speed, anonymity, and divisibility. Indeed, a Bitcoin can be divided down to 1 satoshi (0.00000001 Bitcoin, currently worth USD 0.000074), while fiat currencies, in general, can only be divided down to 0.01, making cryptocurrency better than fiat for micropayments. Also, banks require users to divulge their full identity information before making a transaction, while with Bitcoin a user can send as much money as they want anywhere in the world without exposing personal identification information.

However, he says the fixed supply of Bitcoin at 21 million coins is a disadvantage since that will lead to deflation which is theorized to reduce economic activity due to money hoarding. According to him, a stable monetary system must protect against deflation. This point can be debated, however, as a deflationary currency like Bitcoin is a fresh of breath air after the intense inflation the world has experienced.

He notes that cryptocurrency has rapidly accelerated cross-border payments: with cryptocurrency it takes days instead of seconds since there are no intermediaries.

Due to the advantages of cryptocurrency over fiat, Dong He speculates that cryptocurrency will reduce the demand for central bank money. Central banks conduct monetary policy by setting interest rates for inter-bank transactions, but if they cease to have a monopoly over the money supply due to cryptocurrency, then their power to control monetary policy will weaken.

Essentially central banks have no control over cryptocurrency, so whatever money is invested into cryptocurrency is outside of their control.

Dong He suggests a few things central banks can do to remedy the situation. They could make fiat currencies better and more stable so people choose fiat over crypto, regulate cryptocurrency to remove the competitive advantage cryptocurrency has from lack of regulation, or make their money more attractive by releasing their own cryptocurrency.

Unfortunately, up to this point, central banks seem to just be taking one of his suggestions and have been hitting cryptocurrency with more and more regulations. One could hope that eventually they will change their attitude and improve their monetary policies to be more competitive instead of trying to weaken cryptocurrency’s advantages with unfair regulations.

The IMF is headquartered in Washington DC and is an international organization of 189 countries that seek to influence global monetary policy. It is in control of hundreds of billions of USD of reserves which are often used to help countries in peril from debt.

 

Follow BitcoinNews.com on Twitter at https://twitter.com/bitcoinnewscom

Telegram Alerts from BitcoinNews.com at https://t.me/bconews

The post IMF Exec: Crypto Could Weaken Central Bank Power over Monetary Policy appeared first on BitcoinNews.com.