There are reports that governments around the world are looking to Central Bank Digital Currencies (CBDCs) as a way to enhance the existing fiat ecosystem. The technical backdrop for cryptocurrency, with central bank backing, may be the way to enable a wealthy monetary system, as a publication from the International Monetary Fund (IMF) suggests, as reported by Cointelegraph.
“Digital technologies promise a bright future for the monetary system,” reads the post, credited to IMF deputy managing director Agustín Carstens and BIS executives Jon Frost and Hyun Song Shin.
Based on information from Cointelegraph, a June BIS study found that cryptocurrencies may outpace fiat ecosystems when it comes to achieving the goals of a future monetary system. Concerns about cryptocurrencies preventing it from being adopted by the mainstream, as BIS leaders said, have been encumbered by decentralized finance (DeFi) and reliance on volatile assets.
“By embracing the trust afforded by central bank money, the private sector can embrace new technologies to foster a monetary ecosystem,” the message emphasized, noting that wholesale and retail CBDCs have the potential to inherit the features of the cryptocurrency ecosystem to benefit end users.
Furthermore, Cointelegraph noted that the message further recommended that central banks use innovations such as tokenization to enable purchases through multiple fiat currencies, to the benefit of merchants and customers. According to an IMF forecast, he predicted a global economic slowdown to raise concerns about an impending recession in the cryptocurrency markets. Previously, the publication indicated that Bitcoin (BTC) markets had the potential to recover from the uncertainty surrounding economic and geopolitical tensions. However, the IMF pointed out that the liquidations, bankruptcies and losses of companies such as Celsius, Three Arrows Capital and Voyager Digital Holdings were impacting traditional financial systems, and the effect of their impact.
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