The International Monetary Fund (IMF) estimates that central bank currencies will confront major obstacles in a rapidly digitizing financial system.
In a new blog post, the IMF says that as digital currencies increasingly crop up and the financial sector rapidly evolves, the public and private economic sectors will clash and put pressure on central banks to innovate and keep up with tech powerhouses.
“Today’s, or even tomorrow’s, money is unlikely to meet the needs of the day after… Keeping with the pace of change of technology, user needs, and private-sector competition will be challenging for central banks…
Central banks would thus have to become more like Apple or Microsoft in order to keep central bank digital currencies on the frontier of technology and in the wallets of users as the predominant and preferred form of digital money…
Much depends on each central bank’s ability and willingness to consistently and significantly innovate. Keeping pace with technological change, rapidly evolving user needs, and private sector innovation is no easy feat.”
The IMF believes that the best way for central banks to compete with the fast-paced digital currency revolution is to build a system where the private sector can convert its assets into a central bank currency.
