BIS execs: Crypto’s adaptability vital to ideal monetary system

BIS executives said bottlenecks in DeFi and reliance on volatile assets are hindering the broad adoption of cryptocurrencies.
BIS execs: Crypto's adaptability vital to ideal monetary system
BIS execs: Crypto’s adaptability vital to ideal monetary system

Governments view central bank digital currencies (CBDCs) all over the world as a way to enhance the current fiat ecology. According to a recent International Monetary Fund (IMF) article, cryptocurrency’s technological capability, backed by the central bank’s underlying trust, is essential to establishing a robust financial ecosystem.

“Digital technologies promise a bright future for the monetary system,” reads the publication attributed to IMF deputy managing director Agustín Carstens and BIS executives Jon Frost and Hyun Song Shin.

According to a BIS analysis from June, cryptocurrencies outperform fiat environments to accomplish the broad objectives of a future monetary system.

The BIS executives cited bottleneck congestion in decentralized finance (DeFi) and the reliance on volatile assets as some of the most critical issues hindering the widespread adoption of modern cryptocurrencies.

According to the report, both wholesale and retail CBDCs may acquire traits from the crypto ecosystem that are advantageous to end users:

“By embracing the core of trust provided by central bank money, the private sector can adopt the best new technologies to foster a rich and diverse monetary ecosystem.”

It also advised central banks to use cutting-edge technologies like tokenization to permit payments in different fiat currencies, which would be advantageous to both customers and business owners.

The doomsday IMF estimate calling for a slowdown in world economic growth sparked worries about an impending recession in the cryptocurrency markets. When the ambiguity around the current situation of the economy and the geopolitical tensions are resolved, the markets for bitcoin (BTC) are expected to rebound.

The IMF noted that traditional banking systems were only marginally affected by the multiple liquidations, bankruptcies, and losses at significant companies including Celsius, Three Arrows Capital, and Voyager Digital Holdings.