Digital Payments and Finance
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Digital technology has been used in finance for some time. But recent advancements in the recording and settlement of assets – whether these are money or securities – has opened new opportunities and raised new risks. New firms, and even open-source developer communities, have introduced new digital assets such as crypto assets, stablecoins, and eMoney, some of which can be used for payments. Financial firms are also issuing and transacting assets on new infrastructures leveraging distributed ledger technologies. Questions emerge relative to their interoperability within and across borders. Finally, central banks are naturally considering how to make central bank money available in new digital forms and on new infrastructures. Macro-financial implications, such as on capital flows and currency use, must also be understood and managed. The same goes for risks to financial stability, financial integrity, and consumer protection for instance.
As the international organization created to promote international monetary cooperation and oversee the stability of the international monetary system, as well as contribute to countries’ economic and financial stability, the IMF plays a key role in this new and evolving space.
Crypto assets, including stablecoins, are once again at the forefront of policy discussions. While crypto assets present opportunities for greater efficiency and competition, they could also pose risks. Ensuring the stability and efficiency of both domestic financial systems and the international monetary framework is essential. This high-level panel will delve into recent developments in the crypto asset space, assess their macro-financial impact, and discuss strategic policy responses..
Publication: Understanding Stablecoins
IMF Blog: How Stablecoins Can Improve Payments and Global FinancePublication: Estimating the Impact of Digital Money on Cross-Border Flows: Scenario Analysis Covering the Intensive Margin
IMF Event: High Level Capacity Development Talk: Digital Currency Revolution: Architecting the Future of E-Money SystemsThe IMF’s CBDC Virtual Handbook is made possible by the generous support of the government of Japan. It is a reference guide for policymakers and experts at central banks and ministries of finance. It serves as a basis for capacity development delivery, aiming to share knowledge, lessons, and frameworks to address policymakers’ most frequently asked questions concerning central bank digital currencies. As our body of knowledge and analysis grows, we will continue to add about five chapters every year aiming to provide about twenty chapters by 2026. Moreover, chapters will be periodically updated, reflecting evolving views.
Assessments can help clarify the appropriate capitalization to best ensure a sound institutional financial position
Policymakers will need to achieve a difficult balance between benefits and risks while safeguarding both individual consumers and financial stability
19 countries in the Middle East and Central Asia are exploring issuing a CBDC
A cautious step-by-step approach would help the region explore new technologies effectively to deliver economic and social gains while managing risks
While the volatility of digital currencies like Bitcoin has kept it out of traditional banking systems, stablecoin is gaining ground in the race for a suitable digital counterpart to fiat currency. Dante Disparte heads strategy and global policy at Circle, which issues two of the world's most widely traded stablecoins. In this podcast, he says stablecoin money can help overcome some of the inefficiencies of the traditional banking system.
While the US dollar has been at the top of its game for decades, new players are testing its reign. Chess grandmaster-turned-economist Kenneth Rogoff has long cautioned of the dangers that high debt and fiscal burdens could have on the world’s favorite reserve currency, and in his latest book, Our Dollar, Your Problem, he says its share of global reserves may be on the decline.
While countries came together in the late 80s to fight money laundering and the financing of terrorism, technology and the advent of virtual currencies have further complicated the tracking of illicit financial flows across borders. In this podcast, IMF assistant general counsel Chady El Khoury says the anonymity of virtual currency transactions is supercharging the ability for criminals to grow their empires.
As tech innovation, particularly in the field of AI, is increasingly focused on a few key players, the industries benefiting from these tools have also become more concentrated. In this podcast, Carl Benedikt Frey says that concentration of AI-using industries will push the direction of technological change further towards automation rather than product innovation.
