In recent days, central banks from the around the world have been actively exploring the prospect of issuing digital currencies. The Bank of England (BOE) has continued to press forward with research into models for central bank-issued currencies, with BOE governor Mark Carney expressing his openness to the idea of issuing a digital currency in future. In other news, a report published by a International Monetary Fund (IMF) official has warned central banks that they must adapt to the innovations brought forward by cryptocurrencies. Lastly, Hong Kong’s acting secretary for financial services and the treasury has indicated that the Monetary Authority “has no plan to issue [central bank-issued digital currency] at this stage but will continue to monitor […] international development.”
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IMF Official Authors Report Discussing Central Bank-Issued Digital Currencies
An article authored by the IMF’s Monetary and Capital Markets Department deputy director, Dong He, has argued that cryptocurrencies may have a negative impact on demand for central bank money in future, and that central banks must be adaptive of the changing financial landscape brought about by cryptographic assets.
The article asserts that “Crypto assets may one day reduce demand for central bank money,” adding that central banks should consider implementing measures to “forestall the competitive pressure crypto assets may exert on fiat currencies” and make fiat currencies “more attractive for the digital age.”
Mr. He argues that “Central banks must maintain the public’s trust in fiat currencies and stay in the game in a digital, sharing, and decentralized service economy. They can remain relevant by providing more stable units of account than crypto assets and by making central bank money attractive as a medium of exchange in the digital economy.”
