- BIS finds key features that prevent crypto from mainstream adoption.
- Cryptocurrencies’ higher monetary goals overpower the current fiat ecosystem.
- IMF recommends CBDCs utilize newer technologies to achieve a richer monetary environment.
Reports show that Central Bank Digital Currencies (CBDC) opens scope for a better monetary system, but there are hurdles in its growth track. BIS (Bank for International Settlements) pointed out that the current cryptocurrencies are restricted in their scope, and thereby limited from mainstream adoption, because of the bottleneck congestion in DeFi (decentralized finance) and the dependence on volatile aids. In a survey, it was identified that the congestion in Ethereum switched the DeFi users to other blockchains.
But the survey suggested that private firms can inherit new technologies to modify the existing system.
An analysis by BIS in June notified that cryptocurrencies are a threat to the existing fiat system when it overpowers the system with its higher goal of a promising monetary system. These goals include efficiency, accountability, safety, stability, etc.
Notably, CBDCs are considered to be a development in the digital world to improve the existing fiat ecosystem. The International Monetary Fund (IMF) assures that crypto-currencies mark a more secure monetary system, guaranteeing a better future.
IMF deputy managing director Agustín Carstens and BIS executives Jon Frost and Hyun Song Shin announced that digital technologies promise a “bright future for the monetary system.”
By embracing the core of trust provided by central bank money, the private sector can adopt the best new technologies to foster a rich and diverse monetary ecosystem.
In addition, IMF recommended the central banks promote innovative techniques such as tokenization so that the customers benefit, using multiple fiat systems.