According to a report issued by the International Monetary Fund (IMF) on June 22, Central Bank Digital Currencies (CBDCs) could potentially enhance financial inclusion and reduce remittance costs. The IMF further emphasized the necessity for effective regulation of cryptocurrency to ensure its secure integration into the payment system.
The IMF indicated that while some countries have outrightly banned crypto assets due to their associated risks, such an approach might not yield long-term efficacy. Instead, the agency suggested that regions should address the factors driving the demand for crypto. Unmet digital payment needs of citizens and the potential for improved transparency by including crypto asset transactions in national statistics are among these demand drivers.
The report revealed an intriguing trend in Latin America and the Caribbean, regions leading the adoption of digital money. Countries like Brazil, Argentina, Colombia, and Ecuador made it to the top 20 in global crypto asset adoption last year. Per the IMF, these nations are seeking the benefits of digital assets, which include protection against uncertain domestic macroeconomic conditions, evasion of capital controls, and improved financial inclusion for the unbanked.
However, the IMF did not overlook the risks associated with crypto assets and underscored the importance of robust regulation for this emerging asset class. Further, it praised CBDCs for their potential to increase financial inclusion in Latin America and the Caribbean by improving the use, robustness, and efficiency of payment systems.
Previously, Kristalina Georgieva, Managing Director of the IMF, highlighted the organization’s efforts towards creating a global platform for CBDCs. She revealed that this infrastructure would ensure interoperability of settlements between digital currencies issued by national central banks, thus preventing underutilization of CBDCs
Interestingly, the IMF’s stance stands in stark contrast to the current outlook of cryptocurrencies in the United States. The US Securities and Exchange Commission (SEC) has recently filed lawsuits against cryptocurrency platforms Binance and Coinbase. The charges leveled against these platforms, including operating without proper registration, have serious implications and sparked a debate on whether crypto tokens should be classified as securities.
