To keep pace with the political challenges and fulfill its mandate, the IMF will increase its resources to facilitate the transition to digital money.
In the documentThe International Monetary Fund outlined its vision for this transformation. It addresses how it will try to partner with other organizations, such as central banks, regulators, and the World Bank. Although not released until this week, the IMF discussed the March document in April.
The International Monetary Fund begins the document by talking about some of the benefits offered by digital currencies. Some of them relate to the speed, ease and economy of transactions that digital infrastructure provides. Moreover, cross-border facilitation can also enhance efficiency and inclusion.
However, the document does provide some conditions that it considers necessary to reap these benefits while properly managing the risks. The document states that “first, the new forms of money must be trustworthy.” By this, he means that they must protect consumers, adhere to the legal framework, and uphold financial integrity.
The document then states that new forms of money should enhance national economic and financial stability. This will require carefully designed public-private partnerships, a smooth transition of the role of banks, and fair competition. Furthermore, the document stresses the need for digital money to be designed to support climate sustainability and effective fiscal policy.
Finally, “digital money must be designed, regulated, and provided in such a way that countries maintain control over monetary policy, financial conditions, open capital accounts, and foreign exchange systems.” The document adds that payment systems should be increasingly integrated rather than isolated.
The goal of the International Monetary Fund
In the end, the document specified that the International Monetary Fund must monitor and advise all its member countries in this rapid transition to the digital economy. To do this, introduce four basic skills. The first is an almost universal adherence. The second is to focus on macro-fiscal policies and the effects of contagion. Third, diversity of knowledge and, finally, unique ties with member states. This will include monitoring and capacity building through banks and ministries of finance.
The IMF may try to reassess its mandate with regard to cryptocurrencies in light of their increasing use by member states. For example, on June 10, the International Monetary Fund said it anticipates a number of “macroeconomic, financial, and legal issues” with El Salvador’s decision to make bitcoin legal tender.
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