The managing director of the IMF believes that stablecoins are no match for central bank digital currencies. The international organization states that one hundred countries explore CBDCs in different phases.
A recent report from the International Monetary Fund (IMF) states that central bank digital currencies (CBDCs) are in an experimental phase. However, the organization considers that that form of money may provide higher stability and security than (decentralized) cryptocurrencies like Bitcoin (BTC).
Kristalina Georgieva, managing director of the IMF, noted that CBDCs might provide higher resilience, security, and availability than private digital money. She explained that they might offer those advantages, besides lower costs, if they have a careful design.
Georgieva considers CBDCs are more advantageous than (decentralized) cryptocurrencies, arguing that the latter have no backing and are inherently volatile. She even believes that central bank digital currencies may be superior to stablecoins.
The official said that the best managed and regulated stablecoins might be no match for a well-designed stable CBDC.
She admitted that CBDCs are still at an early stage of development and said she does not know their true potential.
The IMF report points out that 100 countries are currently exploring the development of CBDCs at different levels. While some are in the research phase, others are undergoing tests or already distributing those currencies to the public.
Bitcoin Can Solve the Historical Problems of Fiat Money
The position of the IMF on Bitcoin and other cryptocurrencies is less radical now than it was a few years ago. However, the comments from Georgieva show that they still look at them out of the corner of their eye.
Jack Mallers, founder and CEO of Bitcoin payment gateway Strike, talked to the IMF about the advantages of BTC in December. He told them the cryptocurrency could solve the problems that international monetary transactions backed by the financial institution have dragged for years.
The renowned bitcoiner said that cross-border transactions depend on the participation of many intermediaries between the sender and the receiver. Unlike fiat money, the Bitcoin network can reduce slowness and high costs through the Lightning Network.
Since Bitcoin is a decentralized network, there is no need to involve trusted third parties. In other words, users carry out their transactions directly between them, thus making the process easier.
Mallers also described the pioneering cryptocurrency as global money, equally valued everywhere at all times worldwide. He said it is a non-localized and open system and a monetary policy defended by a distributed network of peers.
Bitcoin is different from fiat money, including its digital version as CBDCs. No government can take it or change it, it works all the time, and it is reliable and decentralized enough to survive.
In addition, users do not run the risk that a financial institution can block third-party accounts in that digital system. All the above is strength, compared to digital currencies of central banks, which are just under development.
Bitcoin is trading at around USD 42,378 and has accumulated a profit of 2.1% in the last week. Its daily trading volume is above USD 12.77 billion, and its market capitalization is about USD 802.75 billion, according to CoinGecko.
By Alexander Salazar
