## From Crypto to Central Bank Digital Currency, Podcast Tracks Fintech Boom

_IMF Blog, December 21, 2022_

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## Bibliographic details
- Authors: Tobias Adrian, Tara Iyer
- Published: December 21, 2022

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### Overview
- Authors: Tobias Adrian, Tara Iyer
- Publication date: December 21, 2022
- Focus: How regulators, investors and central banks are embracing the promise—and bracing for the peril—of evolving financial technologies.
- Contextual note: The rapid evolution of financial technology promises wider access to better services, but raises stakes for regulators and supervisors; most fintech firms are small, can grow quickly, and may raise risks for people, companies and industries—as the recent collapse of a major crypto firm shows.
- Series format: five episodes featuring voices from the Monetary and Capital Market department and showcasing IMF research and policy recommendations.

### Podcast episode themes (five episodes)
- Fintech as the Future of Finance
  - Examines the revolution in the global financial system.
  - Examples cited: the Bahamas introducing a central bank digital currency, the Sand Dollar; El Salvador and Central African Republic adopting Bitcoin as legal tender.
- Central Bank Digital Currencies
  - Covers benefits, challenges, and policy considerations around CBDCs.
  - Notes: CBDCs have been adopted or explored by more than 100 countries.
  - Advantages over cash: promoting financial inclusion by reaching people without bank accounts; lowering transaction costs for cross-border payments.
- Fintech and Financial Stability
  - Explores how crypto assets and equity markets, which showed little correlation before the pandemic, since began to move much more closely together.
  - Key point: Crypto is no longer on the fringe of the financial system; greater interconnectedness with other assets could facilitate transmission of shocks and could be destabilizing for financial markets.
- Regulating Fintech
  - Establishes that regulation is intended to protect consumers and investors, not to stifle innovation.
  - Warning: Without regulation, fintech could fuel risks that could potentially even threaten the stability of the financial system itself.
- Fintech in the FSAP
  - Describes how fintech features ever more prominently in the Financial Stability Assessment Program, a comprehensive look at potential systemic risks, and offers a behind-the-scenes view of these regular evaluations.

### Key findings and observations
- Technology-driven innovation, including blockchain, offers benefits such as increased efficiency, competition, and choice.
- Some advances remain untested and could spark new financial stability risks.
- The increased correlation between crypto assets and equity markets since the pandemic implies higher potential for shock transmission.
- CBDCs can promote financial inclusion and reduce cross-border transaction costs.

### Policy implications and recommendations
- Regulators should balance enabling innovation with protecting consumers and investors.
- Integrate fintech considerations into systemic risk assessments, including the Financial Stability Assessment Program.
- Monitor and address the growing interconnectedness between crypto assets and traditional financial markets to mitigate transmission of shocks.
- Consider policy frameworks for CBDCs that leverage advantages over cash while addressing challenges and risks.

### Availability
- The Fund’s podcasts are available on IMF.org and platforms includingApple Podcasts,Spotify,SoundCloudandLibsyn.

*From Crypto to Central Bank Digital Currency, Podcast Tracks Fintech Boom — Tobias Adrian, Tara Iyer; December 21, 2022.*

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## References

- [much more closely together](https://www.imf.org/en/Blogs/Articles/2022/01/11/crypto-prices-move-more-in-sync-with-stocks-posing-new-risks)
- [Financial Stability Assessment Program](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/14/Financial-Sector-Assessment-Program)
- [IMF.org](https://www.imf.org/en/News/Podcasts)

_Source: https://www.imf.org/en/blogs/articles/2022/12/21/from-crypto-to-central-bank-digital-currency-podcast-tracks-fintech-boom_