IMF Discussing Cryptocurrency Regulation Approach
The last couple of months have brought along numerous regulatory efforts from the U.S. Securities and Exchange Commission (SEC), alongside the CFTC.
Now, the International Monetary Fund (IMF) is asking worldwide central banks to adopt a more innovative position towards fiat currencies. In other words, officials want fiat currencies to become ‘more attractive for the digital age’. In order to do so, the Monetary and Capital Markets Department (MCMD) deputy director, has recommended a total of three responses, meant to reduce the economic and control rivalry between banks and digital currencies.
In a press statement, he mentioned that: ‘Central banks should continue to strive to make fiat currencies better and more stable units of account’. The IMF believes that experience and collective expertise have an essential role in financial policymaking, therefore collaboration standards should be enhanced.
The managing director of the IMF, Christine Lagarde, seems to agree, as she stated that: “the best response by central banks to crypto is to continue running effective monetary policy while being open to fresh ideas and new demands, as economies evolve.”
However, the IMF has also turned its eye towards future cryptocurrency regulation. With this in mind, it believes that banks should apply all possible measures to reduce money laundering potential, while also further improving consumer protection. Talks of ‘effectively taxing digital currency transactions’ have also ensued.
Despite this attitude, the IMF does believe in the potential of cryptocurrencies. In fact, it suggested the introduction of a Central Bank Digital Currency, which would provide several benefits, such as: making traditional financial institutions more attractive for monetary settlement, reduced transaction costs, and cross-border payments.
Regarding this, the MCMD deputy director, mentioned that: “They could make central bank money user-friendly in the digital world by issuing digital tokens of their own to supplement physical cash and bank reserves. Such central bank digital currency could be exchanged, peer to peer in a decentralized manner, much as crypto assets are.”
Based on these aspects, it can be concluded that the IMF is well-aware that digital currencies are here to stay. However, there is an on-going discussion about the possible regulatory approaches, many of which don’t encourage the demise of crypto, but rather want more control.