IMF things digital money soon be replaced by fiat
An IMF note, “Growing Digital Money,” contains information about how Fintech companies increasingly began to compete with traditional banks and credit card companies.
The introduction states:
Digital forms of currency are increasingly in the wallets of consumers, as well as in the heads of politicians. Cash and bank deposits struggle with e-money denominated and tied to currencies like the euro or the dollar.
Ultimately, cash and bank deposits are reported to face stiff competition.
E-money forms that are growing in popularity, for example, steakblocks, “may be more convenient as a means of payment,” but the authors question the stability of their value. “In the end, it is economically similar to a private investment fund that guarantees repayment at par. If 10 euros are included, 10 euros should come out. The issuer must be able to fulfill this obligation, ”they write.
Banks should be able to take measures to combat such “payouts” by offering better services or similar products for electronic money, but politicians warn that there may be some failures in the banking industry. Despite this, banks as such will remain, since firms offering new payment methods can become banks themselves and use their advantage to provide a targeted loan.
IMF Report on E-Money and Facebook Libra
The document discusses various types of new payment mechanism, including e-money.
As one example of e-money, the message directly concerns the Facebook Libra cryptocurrency project, which is expected to be tied to fiat money and government bonds:
Libra coins can be exchanged for fiat at any time for their share of the current value of the underlying portfolio without any price guarantees. A transfer of Libra, in effect Libra shares (although potentially without a legal requirement), will include payment.
Regarding regulation, central banks will play an “important role” in shaping the future of electronic money, with the ability to set rules that will have a strong influence on their adoption and on how much they put pressure on commercial banks.
The document states:
One solution is to offer new e-money providers access to central bank reserves, albeit under strict conditions. This increases risks, but also has various benefits. For example, central banks in some countries could collaborate with electronic money providers to effectively provide a “central bank digital currency (CBDC)”, a digital version of cash.
The document proposes another public-private solution, called the "synthetic CBDC" (sCBDC). This means that the central bank will offer settlement services to e-money providers, including access to central bank reserves. However, “all other functions will be the responsibility of private electronic money providers in accordance with the law.”
The IMF believes that sCBDC will be a less expensive and risky model, so it will allow the private sector to “innovate and interact with customers,” while Central Banks will bring “trust and efficiency” to it.
Похожие новости
