The IMF, the World Bank, and the Bank for International Settlements (BIS) have expressed support for central bank-backed digital currencies (CBDCs), believing that their adoption might promote global development.
They argued in a report released jointly by the three institutions on Friday that projects like the US digital currency will help global growth by reducing dependency on the costly and time-consuming transfer services now used for financial transactions around the world.
Indermit Gill, World Bank Group Vice President for Equitable Growth, Finance, and Institutions, stated, “Faster, cheaper, more transparent and more inclusive cross-border payment services would deliver benefits for citizens, businesses, and economies worldwide.”
The G20 report also looked at the hazards of adopting digital currencies, emphasizing the importance of simple cross-border transactions. “could increase risks for runs on both local banking sectors and currencies.” Emerging markets and poor countries, according to Gill, are especially vulnerable.
With the usage of digital currencies, companies and banks will be able to communicate and exchange information more easily.
Several countries have taken steps to join the race to establish a CBDC, with China taking the lead. Ukraine just enacted a bill that elevates the country’s CBDC to the same level as fiat currency.
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