On Monday, the International Monetary Fund (IMF) published a report on crypto assets like central bank digital currencies (CBDCs) and global stablecoins (GSCs). Moreover, the IMF also hosted a virtual panel that discussed digital currencies and cross-border payments with the Federal Reserve Chair Jerome Powell. The Fed Chair says as far as a U.S.-issued CBDC is concerned, it is “more important to get it right than to be first.”
The IMF held a virtual panel that discussed digital currencies and cross-border payments on Monday morning. The panel was hosted by the IMF managing director in Washington, DC, Kristalina Georgieva, and the Federal Reserve Chair Jerome Powell participated. Reports note that Powell talked about the impact of a U.S.-issued CBDC and how it could affect financial stability.
“We do think it’s more important to get it right than to be first and getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks,” Powell said during the panel discussion on Monday. “Also recognize the important trade-offs that have to be thought through carefully.”
The report published by the IMF on the same day, also highlights that CBDC’s could be beneficial, but may not cast a net over every monetary issue. For instance, CBDCs may not help if a local currency is a poor unit of account, the IMF report stresses. Further, a currency substitution “depends on the degree of monetary stability and other country circumstances, including legal frameworks and regulation.”
The IMF’s report details that the emergence of CBDCs and GSCs will require further analysis. The researchers say that countries that invoke a CBDC should also consider whether or not nonresidents should use their CBDC.
“Authorities will also need to assess whether restrictions on payments in CBDCs are consistent with countries’ obligations under international and bilateral treaties, including the…