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IMF: Digital Currencies Won't Replace US Dollar Anytime Soon

2020-01-11 02:31:22

It is absolutely clear that digital currencies will not replace the dollar, because even if the IMF indicates it is a traditional issue

What is your opinion of the IMF economist regarding the dollar and digital currencies?

 Gita Gpopinath, who has been an IMF economist since January 2019, has made it very clear that digital currencies will not replace the dollar, even though it is evident that cryptomonies are represented, with "intriguing possibilities", as we can clearly see the global acceptance and the lack of infrastructure, according to the opinion article issued for the Financial Times last Tuesday. 

Exactly what does the dollar imply in relation to the IMF?

 According to the IMF economist, the dollar is maintained permanently and as a state of law and protection, since according to technological advances this currency is presented as the largest global reserve in the world, making the green bills appear as a force in the eyes of the leaders, there are certain measures that we must take into account that have been issued as opinions by some leaders such as the outgoing governor of the Bank of England, Mark Carney, which makes it clear that digital currencies will not replace the dollar. 

 Emerging markets make up a large part of the world market's GDP, so the U.S. currency may change, even though it is expected that at least in the short and medium term digital currencies will not replace the dollar, since today more than 60 percent of international reserves are still held in foreign currency, reaching more than $100 million during the third quarter of 2019, since the difference between the two major world currencies is clearly visible, since the Euro barely reaches 20 percent, which represents a small part even though this is a fairly strong currency.

Launch of digital currencies by major banks.

 Jay Powell, president of the Federal Reserve, stated in November that the U.S. central bank had among its plans the possibility of exploring the dollar digitally, but that's not all, since Christine Lagarde stated that the institution she presides over 'could go "ahead of the curve" by referring to CBDC. This means that even if we think that digital currencies will not replace the dollar, it is clear that these physical currencies could at some point become digital, thanks to the worldwide acceptance they have had. For it is no secret that the People's Bank of China has revealed the launch of its digital Yuan cryptomoney, the aim of which is to invest abroad, a matter which is obviously of considerable interest to the IMF.

  What advice has the President of the IMF given about digital currencies?

Christine Lagarde indicated that the Marshall Islands, in 2018, might have some indication of the launch of a digital currency, which would work in conjunction with the U.S. dollar, unless the country had implemented certain controls against money laundering, as this would involve the loss of the dollar and this would effectively lead to the elimination of the entire financial system, is only an opinion issued by the IMF president, of course having previously made some investigations where during 2016, it was clear his comment about central banks would have to be "serious" when considering issuing CBDC, as a financial element, which has as a premise the privacy of payments, a detail that is extremely relevant in the world economy.

 In general terms, it is difficult to say that digital currencies will not replace the dollar, because even though important elements issued by the IMF and some major banks around the world have emerged, the U.S. currency remains strong.

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