International Monetary Fund Report: Crypto May Reduce Demand For Fiatbr>
The International Monetary Fund (IMF) has released a report on global monetary policy in the digital age with a key takeaway: cryptocurrency may one day reduce demand for central bank currency.”
The IMF report posits that cryptocurrencies could someday lower the demand for fiat currencies by creating a shift from “credit money to commodity money.” The report is a significant sign that cryptocurrencies are gradually being accepted by traditional financial institutions as more than a passing fad.
“We cannot rule out the possibility that some crypto assets will eventually be more widely adopted and fulfill more of the functions of money in some regions or private e-commerce networks,” said the report.
The study notes that the public’s skepticism toward traditional institutions has been fueled by the global financial crisis and bank bailouts. That has spurred the growth of crypto.
“Such a shift could also portend a change in the way money is created in the digital age: from credit money to commodity money, we may move full circle back to where we were in the Renaissance,” said the IMF report.
“Economists continue to debate the origins of money, and why monetary systems seem to have alternated between commodity and credit money throughout history. If crypto assets indeed lead to a more prominent role for commodity money in the digital age, the demand for central bank money is likely to decline,” the report added.