The IMF (International Monetary Fund) published the Foundation of Trust paper. The report indicated that central banks should harness crypto-related technological innovations. Also, banks should ensure a diverse and rich fiscal system when implementing CBDCs.
Moreover, the paper highlighted flaws with digital coins. Meanwhile, three BIS (Bank for International Settlements) members wrote the report.
They include General Manager Agustin Carstens, America’s head of economics Jon Frost, and leader of research and economic advisor Hyun Song Shin.
Central banks monitor private operations, ensure smooth payment system functioning, implement payments to finality, and issue sovereign currencies.
These undertakings have had individuals trusting central banks. Moreover, the paper highlighted that trust is essential for the financial system’s functioning.
In the digital world, central banks have CBDCs that implement the mentioned crypto capabilities. They include composability and programmability.
Moreover, the central banks’ backing means trust for the assets. Also, the paper argues about adopting crypto-related technological advancements when introducing CBDCs. Thus, this would alleviate volatility while promoting trust-based transactions.
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In the BIS (Bank of International Settlements) (in June this year) revealed a statement that presented similar narratives about digital coins. The report was crucial for the crypto space as the market had started to tumble only in May this year.
Also, the report highlighted what the Bank of International Settlements perceives the structural crypto flaws. These faults make digital tokens unsuitable for the financial system.
Meanwhile, BIS had declared the launch of a crypto market intelligence site in June this year. It introduced the platform to analyze crypto’s economic activity, market caps, and financial stability risks.
The latest paper finalized that digital technologies highlight an impressive future for the financial system. Implementing technologies like tokenization & its underlying CBDC technological architecture can support a robust monetary system.
On the other hand, the crypto market endured bearish pressure during this publication. The global cryptocurrency market cap remained beneath the $1 trillion mark, losing 0.34% within the past day to $976.57 billion. Also, the market volume dropped 27.68% in that timeframe to $44.11 billion.
Stay tuned for upcoming financial news.