Reportedly, world governments see central bank digital currencies (CBDCs) as a way to improve the existing fiat ecosystem. Cryptocurrency’s technical background, with support from the central bank can be the way to enable a rich monetary system, as suggested by an International Monetary Fund (IMF) publication, as reported by Cointelegraph.
“Digital technologies promise a bright future for the monetary system,” reads the publication, attributed to Agustín Carstens, deputy managing director, IMF, and Jon Frost and Hyun Song Shin, executives, BIS.
On the basis of information by Cointelegraph, a BIS study from June unveiled that cryptocurrencies can overtake fiat ecosystems when it comes to the achievement of goals with regard to a future monetary system. Concerns around cryptocurrencies prevent it from mainstream adoption, as stated by the BIS executives, have been in congestion with decentralised finance (DeFi) and the trust on volatile assets.
“By embracing the trust provided by central bank money, the private sector can adopt the new technologies to foster a monetary ecosystem,” the post emphasised, with the point that both wholesale and retail CBDCs has the potential to inherit traits from the cryptocurrency ecosystem to benefit end users.
Moreover, Cointelegraph noted that the post further recommended that central banks should utilise innovations such as tokenisation to allow purchases through multiple fiat currencies, to further benefit merchants and customers. As per an IMF forecast, it predicted a global economic slowdown to raise concerns about an incoming recession in the cryptocurrency markets. Previously, the publication reported that Bitcoin (BTC) markets have the potential to recover from the uncertainty around economy and geopolitical tensions. However, the IMF pointed out that liquidations, bankruptcies and losses at firms such as Celsius, Three Arrows Capital and Voyager Digital Holdings had an impact on traditional financial systems, and the effect from the impact of it.