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.
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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.
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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.
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