Recently, the International Monetary Fund (IMF), an international organization working towards cooperation of the global monetary, released a blog post where the emphasis was laid on the co-existence of the Digital Currencies of the Central Bank and the privately released cryptocurrency.
The post was written and published by the financial counselor of IMF, Tobias Adrian, and its Deputy Chief of Monetary and Capital Markets, Tommaso Mancini-Griffoli. The blog post argued that contrary to the prevailing narrative, private and public issued currencies could co-exist as their links and coincidence can be traced back to history.
The IMF is promoting this stance because innovation is promoted through privately distributed money, whereas publicly generated money is more concerned with stability. These factors led to the concept that both currencies hold equal significance and value in the market; henceforth, both currencies are mutually required to generate a successful economy.
This statement was released following the high tensions between the central bank and cryptocurrency due to their rising competition. Back in November 2020, the German Finance Minister initiated a conversation for introducing digitized European currency. Shortly after, Fabio Panetta, the Executive Board member of the European Central Bank, argued that such steps threaten the sovereignty of the European states.
On an altering note, another state experiencing similar tensions between currencies is the United States of America. Under this context, a company called Ripple Labs finds itself amid the currency dilemma. The company has been issued a digital currency license in New York, yet the company is under the target of central banks. This is because if Ripple Labs favors cryptocurrency, other companies based in the USA will follow a similar path. As a result, the central bank currency may lose its value.
However, instead of instigating more conflict, the IMF’s blog-related statement argues for both currencies to realize their unique importance in the market instead of drenching themselves in conflict and competition. In this manner, both currencies, crypto and central bank-issued will contribute individually to the economy.
Cryptocurrency can promote innovation, while the central bank-issued currency can introduce stability to the economy. Henceforth, it can be argued that the co-existence of both currencies can generate the huge potential for global and national economies.
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