IMF sees “critical role” in global transition to digital currency

NEW YORK (Reuters) – The International Monetary Fund must increase its resources as it seeks to “monitor, advise and help manage this deep and complex transition” to digital currency, according to an IMF document released Thursday.

Digital money can make payments more accessible, faster and cheaper, according to the newspaper. But for this to happen, policymakers must address the main challenges: digital money must be trusted, must protect national economic and financial stability, and the stability of the international monetary system must remain.

“The Fund has a critical role to play in helping its members harness the benefits and manage the risks of digital money,” the newspaper said.

Importantly, digital currency “must be regulated, designed and provided that countries retain control over monetary policy, financial conditions, opening of the capital account and exchange rate regimes”.

The paper distinguishes between central bank digital currencies, stablecoins and electronic money, which it focuses on, and crypto-assets, including bitcoin. “Although different types of digital currency are taken into account, this document does not take a position on which form may predominate. “

The document, dated March, discussed by the IMF’s board in April and released on Thursday, offers a vision of how the Fund has evolved and how it seeks to partner with other organizations such as the central banks, regulators and the World Bank.

“The Fund also needs to step up,” the newspaper said.

“The Fund must rapidly strengthen, broaden and deepen its well-established work on digital currency, while coordinating and collaborating closely with other institutions within its mandate. The Fund must also rapidly increase its resources devoted to these subjects.

In a separate blog post earlier this week, the director of the IMF’s Monetary and Capital Markets Department and the director of its legal department said any attempt to use cryptoassets as national currencies would be risky.

The benefits “including the potential for cheaper and more inclusive financial services, should not be overlooked,” they said.

“However, governments need to step up efforts to provide these services and take advantage of new forms of digital money while preserving stability, efficiency, equality and environmental sustainability. Trying to turn crypto-assets into a currency national is a deprecated shortcut. “

(Reporting by Rodrigo Campos; Editing by Catherine Evans)