IMF: Cryptocurrencies And CBDCs May Be More Efficient Than Existing Payment Methods
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Despite skepticism about cryptocurrencies, the International Monetary Fund (IMF) has acknowledged that digital assets may serve as viable alternatives to conventional financial products.
In a blog post on June 16, the IMF claimed that some cryptocurrencies and central bank digital currencies (CBDCs) could be a more efficient payment alternative than credit and debit cards, particularly in energy use.
“Depending on the specific details of how they are configured, CBDCs and some kinds of crypto assets can be more energy-efficient than much of the current payment landscape, including credit and debit cards,” the IMF said.
Cryptocurrency with card payments integration
In addition, the IMF disclosed that several central banks are contemplating making CDBCs accessible on physical cards; thus, a solution should be thought of to reduce energy use. According to the company, integrating cryptocurrencies and CBDCs with physical cards would facilitate widespread adoption.
Although the future of money is yet undetermined, the IMF noted that authorities contemplating the implementation of CBDCs and cryptocurrencies should examine the energy component thoroughly.
Energy usage will play a significant role in defining the future of money, particularly when payment systems adopt distributed ledger technology.
However, the IMF noted that proof-of-work (PoW) cryptocurrencies such as Bitcoin require more energy than credit cards and suggested concentrating on digital assets using consensus mechanisms or permissioned systems. The agency claimed that “these advances put crypto’s energy consumption well below that of credit cards.”
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IMF’s caution about crypto
Previously, the IMF held that the expansion of cryptocurrencies constituted a danger to financial stability. Increasingly, the corporation has demanded that the government respond swiftly and establish crucial industry legislation.
As a result, the IMF issued instructions for creating a standardised worldwide crypto regulatory framework. The policies primarily aimed to equalise the playing field for all crypto stakeholders.
Intriguingly, Gita Gopinath, the head economist of the International Monetary Fund, rejected a blanket ban on cryptocurrencies but advocated for the industry to be regulated. Her demand for industry regulation is motivated by the need to safeguard growing markets.
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