Central bank digital currencies (CBDCs) are viewed by governments all over the world as a way to enhance the current fiat ecology. According to a recent International Monetary Fund (IMF) article, cryptocurrency’s technological capability, backed by the central bank’s underlying trust, is essential to establishing a robust financial ecosystem.
The article, which was written by BIS executives Jon Frost and Hyun Song Shin and IMF deputy managing director Agustin Carstens, claims that “digital technologies promise a bright future for the monetary system.”
According to a BIS analysis from June, cryptocurrencies outperform fiat environments in terms of accomplishing the broad objectives of a future monetary system.
The BIS executives cited bottleneck congestion in decentralized finance (DeFi) and the reliance on volatile assets as some of the most important issues hindering the widespread adoption of modern cryptocurrencies.
The crypto ecosystem may endow both wholesale and retail CBDCs with capabilities that benefit end customers.
It also advised central banks to use cutting-edge technologies like tokenization to permit payments in different fiat currencies, which would be advantageous to both customers and business owners.