Fun

IMF Cautions Central Banks May Have to Rethink What Constitutes Reserves

News Feed - 2020-12-18 09:12:38

IMF Cautions Central Banks May Have to Rethink What Constitutes Reserves


The IMF warns that central banks may have to rethink what constitutes their reserve currency holdings. In a recent study, the global lender points to the changing geopolitical landscape, technological advances and the impact of the Covid-19 pandemic as events likely to influence the composition of reserves. Advances in Financial Technologies


In addition to the US dollar, other currencies like the Euro, the Japanese and the British pound act as settlement currencies in global trade. Still, the US dollar dominates when it comes to its status as the world’s reserve currency.



However, in a study, whose findings are shared via the global institution’s blog, the IMF does say that the pandemic inspired “advances in financial and payment technologies” will likely “impact the future composition of reserve holdings.”


According to the authors of the blog, many central bankers are now aware of threats from private issuers of digital money, like Facebook’s Diem. Consequently, some central banks may be attempting to counter this threat by issuing their own digital currencies. The authors write: (The) potential competition from private issuers such as Diem – Facebook’s blockchain-based payment system – has spurred major central banks to accelerate work on central bank digital currencies and cross-border payments.



Institutions like the European Central Bank and the People’s Bank of China, which are already “exploring the issuance of central bank digital currencies,” believe that their ultimate success on this front “could increase demand for their currencies.” In turn, this increased demand will accelerate the dumping of the US dollar as the preferred global reserve currency. Superior Technology Prevails


Still, the IMF blog post reminds central bankers that simply issuing a digital currency is no guarantee of its acceptance as another reserve currency. Instead, only “superior technology platforms” can help new currencies “overcome some of the advantages of incumbent currencies.” The authors conclude their sentiments on this reserve currency subject saying: Depending on the adoption and use of public or private digital money, central banks might have to rethink what constitutes, and how to hold, reserves going forward.


Meanwhile, the blog also identifies the shifts in international finance, the changing trade links and invoicing practices as other factors that could propel the accelerated transformation of the reserve currency status quo.


Do you think the US dollar’s global dominance is coming to an end? Tell us what you think in the comments section below. QE Infinity: US Fed to Keep Rates at Zero, Billion-Dollar Bond Purchases Until Economy Recovers ECONOMICS | 6 hours ago Bitcoin on Exchanges Drop to Lows Not Seen Since 2018, Long-Term Holders Realize Profits ECONOMICS | 4 days ago Tags in this story adoption of cryptoassets, bitcoin world"s reserve currency, central bank digital currencies, Central Banks, Covid-19 pandemic., Cross Border Payment, Diem, Digital Currency, European Central Bank, Facebook, IMF, reserve currency, US Dollar


Image Credits: Shutterstock, Pixabay, Wiki Commons Purchase Bitcoin without visiting a cryptocurrency exchange. Buy BTC and BCH here. Show comments

News Feed

Ethereum vs Tron: Comparing Data, Defi and Stablecoins from Both Chains After Viral Tweet
Ethereum vs Tron: Comparing Data, Defi and Stablecoins from Both Chains After Viral Tweet On February 7, Cold Card and Opendime creator, Rodolfo Novak (also known as NVK), tweete
Tom Mitchelhill54 minutes agoUK risks regulating NFTs the wrong way, says Mintable CEO“It’s not just a piece of artwork”: Mintable CEO Zach Burks argues that the United Kingdom government still hasn’t caught up o
Economist Peter Schiff Warns Fed Action Could Lead to Market Crashes, Massive Financial Crisis, Severe Recession
Economist Peter Schiff Warns Fed Action Could Lead to Market Crashes, Massive Financial Crisis, Severe Recession Gold bug and economist Peter Schiff says there are two possible out
Bank of Russia Ready to Legalize Crypto Mining If Miners Sell Minted Coins Abroad
Bank of Russia Ready to Legalize Crypto Mining If Miners Sell Minted Coins Abroad The Central Bank of Russia would agree to the legalization of cryptocurrency mining, provided the
Ukrainian President Signs Law Opening Door for Digital Hryvnia, Regulatory Sandbox
Ukrainian President Signs Law Opening Door for Digital Hryvnia, Regulatory Sandbox President Volodymyr Zelensky has signed a law that will allow the National Ban
‘Big Short’ Investor Michael Burry Says ‘the Fed Has No Intention of Fighting Inflation’
"Big Short" Investor Michael Burry Says "the Fed Has No Intention of Fighting Inflation" Hedge fund manager Michael Burry, famed for forecasting the 2008 financial crisis, says tha
Bitcoin Could Could Gain Momentum For A Move To $150,000 If Bulls Reclaim This Level – Details
Este artículo también está disponible en español. Bitcoin is currently trading at $90,800 after a strong 13% rebound from the $81,000 level, as bulls attempt to regain co
Genesis Global secures court approval for $3B payout
Amaka Nwaokocha1 hour agoGenesis Global secures court approval for $3B payoutAccording to Judge Lane, any available funds for distribution by Genesis are being exhausted by creditor claims, which take priority over DCG
Crypto Network Hashrates Recover From Summer Slump — Ethereum’s Hashrate Captures All-Time High
Crypto Network Hashrates Recover From Summer Slump — Ethereum"s Hashrate Captures All-Time High On November 2, 2021, the Ethereum network’s global hashrate tapped an all-t
Zhiyuan Sun7 hours ago$7.8B lost in crypto Ponzi and pyramid schemes in 2022: ReportIllicit activities related to crypto increased across the sector in 2022 despite an overall market downturn.1483 Total views2 Total shar
Crypto exchange user goes AWOL after being sent $650K by mistake: Report
Jesse Coghlan4 hours agoCrypto exchange user goes AWOL after being sent $650K by mistake: ReportOTCPro user Kow Seng Chai reportedly hasn’t responded to emails, calls or appeared in court since the exchange mistakenly
Bitcoin As A Strategic Asset? CryptoQuant CEO Questions US’s Next Move
Este artículo también está disponible en español. Since President-elect Donald Trump raised the possibility of establishing a US Bitcoin Strategic Reserve, many advocates