The International Monetary Fund says it has a mandate to help countries around the world adopt and adapt to digital currencies, but only if the digital money is in the public interest — which Bitcoin is not, according to an IMF report published yesterday.
Fast facts
- While the IMF recognizes the potential benefits of digital currency technology, adoption should not be undertaken at the expense of economic stability, the IMF said, in a statement. “We must look beyond the dazzle of technology and the alluring image of futuristic payment services. At the IMF, we must identify and help countries solve the deeper policy tradeoffs and challenges that are arising.”
- “Digital money must be designed, regulated, and provided so that governments maintain control over monetary policy to stabilize prices, and over capital flows to stabilize exchange rates,” the report said. “These policies require expert judgment and discretion and must be taken in the interest of the public.”
- The report discusses different forms of digital currencies, including central-bank digital currencies and stablecoins, and outlined the costs and benefits of each. But it had a damning assessment of private cryptocurrencies like the world’s currently most popular one, saying: “The least stable of the lot, which hardly qualify as money, are cryptoassets (such as Bitcoin) that are unbacked and subject to the whims of market forces.”
- According to its most recent data, the IMF expects there to be at least 110 CBDC projects in some level of development around the world, including China’s e-CNY digital yuan project, which is currently being tested cross the nation and scheduled for official launch in time for the Beijing 2022 Winter Olympics.
- This is the second report the IMF released recently on the subject of the digital economy, following a veiled warning released earlier in the week against any country wishing to follow El Salvador’s lead in making Bitcoin legal tender. The IMF said it recognized why such a move may be attractive to countries with less stable economies, but said any attempt would be an “inadvisable shortcut” to improving the economy through other means.
- Both reports come amid findings from Hong Kong-based cryptocurrency exchange Crypto.com that the number of crypto users around the world grew to 221 million in June — roughly double the number of crypto users in January.