International Monetary Fund (IMF) conducted a market survey to check on the market trend toward and comparison between the influence of traditional fiat currency and much popular digital cryptocurrencies. And IMF claimed that traditional central banks need to establish more beneficial policies to make fiat currencies more attractive for the digital age. An official from IMF Dong He who is the Deputy Director of the monetary and capital markets supported the fact of strong competition between fiat & cryptocurrencies and he offered three very important steps for every central bank to compete with cryptocurrencies.
Three Recommendations for Central Banks to Compete With Crypto
- Every central bank must have to work effectively to make fiat currencies more attractive, better, and stable units of account, the best response by central banks is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.
- It is necessary to recognize the crypto market and regulate its assets to avoid any unfair competitive advantage. Banks need to apply rigorous policies in order to stop money laundering, strengthening consumer protection, and effectively taxing crypto transactions.
- Central banks should launch their own user-friendly digital currency and issue these tokens to their clients against physical cash and bank reserves and could be exchanged from client to client in a decentralized model.
Regulation of cryptocurrencies is “inevitable” and necessary on an international level, focusing on regulating “activities” over “entities, crypto markets must be regulated by the same laws that apply to traditional markets, cryptocurrencies could threaten the stability of traditional financial markets, and that regulations must be developed on a global scale with help from the IMFChristine Lagarde, Managing Director IMF
Many of the IMF officials have criticized cryptocurrencies and suggested that there should be more tough regulations for crypto.