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IMF Magazine: Money Revolution in the Age of Crypto and CBDCs

IMF blog | Gita Bhatt | Sep 1, 2022

IMF money revolution magazine - IMF Magazine:  Money Revolution in the Age of Crypto and CBDCsThe recent plunge in crypto assets has left investors numbed by losses and surely in doubt. But the future of money is undoubtedly digital. The question is, what will it look like? In our latest issue of Finance & Development, some of the world’s leading experts try to answer this complex and politically charged question.

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Not every form of digital money will prove viable. Bitcoin, now down nearly 70 percent from its November peak, and other crypto assets fail as money, says Singapore’s Ravi Menon, among others. While they are actively traded and heavily speculated on, prices are divorced from any underlying economic value. Stablecoins are designed to rein in the volatility, but many have proved to be anything but stable, Menon adds, and depend on the quality of the reserve assets backing them.

Still, journalist Michael Casey argues, decentralized finance and crypto are not only here to stay but can address real-world problems such as the energy crisis.

Regulation is key. The regulatory fabric is being woven, and a pattern is expected to emerge, explain the IMF’s Aditya Narain and Marina Moretti. But the longer this takes, they argue, the more national authorities will get locked into differing regulatory frameworks. They call for globally coordinated regulation to bring order to markets, help instill consumer confidence, and provide a safe space for innovation.

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Meanwhile, central banks are considering their own digital currencies. Bank for International Settlements chief Agustín Carstens and his coauthors suggest that central banks should harness the technological innovations offered by crypto while also providing a crucial foundation of trust. Privacy and cybersecurity risks can be managed with responsibly designed central bank digital currencies, adds the Atlantic Council’s Josh Lipsky.

Read:  World Bank Report: Fintech and the Future of Finance

Elsewhere in the issue, our contributors look at the benefits and drawbacks of decentralized finance, the future of cross-border payments, and how India and countries in Africa are advancing the digital payment frontier.

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NCFA Jan 2018 resize - IMF Magazine:  Money Revolution in the Age of Crypto and CBDCsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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