IMF Committed to Bitcoin Adoption and Fostering a “Cashless Society”
International Monetary Fund that fosters global monetary cooperation and secure financial stability is keen on a digitized world and is having a “cashless society”vision.
Recently, IMF released a report titled Crypto Currencies and Monetary Policy by Jeffrey Franks, Director of IMF Europe Office where he talks about how “Money has evolved over time, to meet consumer demand…but its basic functions have remained the same,” which is as a store of value, means of payment, and unit of account.
As for why cryptos now, it notes the factors including technological progress, concerns about conventional money and banking, privacy conferences, and political views about the role of government.
The report further notes that currently, it has no potential impact on the monetary policy as its market cap is only $0.1 trillion in compared to broad money (M3) of USA at $14.2 trillion.
“But in the future, large cryptocurrency holdings could complication monetary policy management.”
Though today, they aren’t doing a “good job at fulfilling the main functions of money,” public crypto sectors could provide an interesting solution that would be backed by governments, reduce the cost of money, reliance on private bank and credit card payment systems while providing better consumer protection.
In one of its previous articles, it has also talked about countries like Uruguay and Sweden going Cashless which as Bitcoin podcaster Stephan Livera puts it,
At that time, Stefan Ingves, the governor of Sveriges Riksbank, the central bank of Sweden has talked that demand for cash has dropped by over 50 percent and more than half of all bank branches no longer handle cash.
Seven out of ten of their customers say they can manage without cash and by 2025 half of all merchants expect to stop accepting cash. In on of its recent article, it talks about making negative interest rates work.
“Many central banks reduced policy interest rates to zero during the global financial crisis to boost growth,” now a decade later, interest rates remain low in most countries, meaning “While the global economy has been recovering, future downturns are inevitable.”
“In a cashless world, there would be no lower bound on interest rates. A central bank could reduce the policy rate from, say, 2 percent to minus 4 percent to counter a severe recession. The interest rate cut would transmit to bank deposits, loans, and bonds. Without cash, depositors would have to pay the negative interest rate to keep their money with the bank, making consumption and investment more attractive. This would jolt lending, boost demand, and stimulate the economy.”
Digitalization and technical improvement are an integral part of this cashless society and now, it remains to be seen what role Bitcoin would play in this “cashless society” vision.