Central Bank Digital Currencies’ Future is Bright!
Tao Zhang, Deputy Managing Director of the International Monetary Fund (IMF), made statements regarding the development of Central Bank Digital Currency Unit (CBDC). While talking promisingly on the subject, Zhang claims that CBDCs as a new asset class are an important investment promise for the developing crypto world.
CBDC and its Benefits
Tao Zhang revealed his thoughts on CBDCs at a conference organized by the London School of Economics. Zhang stated that CBDCs offer fast, uninterrupted transfer and there are many advantages in financial services that non-bank users can benefit from.
Touching on the global economy as well, Zhang stated that there has been an economic revolution and central banks must take innovative steps to avoid the old system. He added that CBDCs can combat stablecoins that are “difficult to regulate and can pose a risk for financial stability and monetary policy transfer”.
The danger of dollarization
Tao Zhang also stressed that if the masses adopt these assets, some difficulties may arise. When we look at the current global area, it doesn’t have a design to contain unlimited virtual currencies. For this reason, one or more CBDCs can dominate the market. This situation is called “dollarization“.
“On the one hand, a CBDC used as an international exchange tool can now increase the efficiency of costly, slow and non-transparent cross-border payments. But at the same time, cross-border usable CBDC can increase the possibility of dollarization in countries with high inflation and volatile exchange rates, and therefore reduce the central bank’s ability to run an independent monetary policy. “
We will see together how CBDCs react in the coming days. If you want to follow the news about cryptocurrencies, you can follow our social media channels or browse our news page.
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