The International Monetary Fund (IMF) has said digital currencies could replace traditional cash and bank deposits, citing the rapid rise in adoption in a fintech research note published this week.
The IMF report, titled “The Rise of Digital Money,” said traditional money would face “tough competition and could even be surpassed” by cryptocurrencies, with more people using cryptocurrency worldwide than ever before.
Reacting to the IMF note, Nick Cowan, CEO of the Gibraltar Stock Exchange (GSX) Group, said digital currency was already mainstream, and on course for a “total digital takeover.”
“The concept of digital currency is now firmly embedded in the mainstream, a trend that is set to gain increasing traction according to the latest report from the IMF. The report acknowledges several scenarios that could play out in the future, from coexistence between digital currencies and traditional money, to a total digital takeover,” he noted.
Cowan said the rise of cryptocurrencies is being driven in part by the failings of the legacy banks and financial services.
“It is important to remember that the rise of bitcoin and digital assets has been fueled, in part, due to growing dissatisfaction with the status quo of traditional finance and the associated problems such as transaction delays, unnecessarily protracted processes, and frustrating intermediary fees. As long as these issues are prevalent, the allure of digital currency will be strong,” Cowan said.
Christophe De Courson, CEO of blockchain investment fund Olymp Capital, said that central bank digital currencies could help countries worldwide tackle the problems in their financial systems.
“Given the IMF is tasked with securing financial stability and working to foster global monetary cooperation, it makes sense why this paper was published,” De Courson said. “Across the globe countries are tackling inflation, expensive remittances, and financial exclusion. Digital currencies, in particular stablecoins, are being explored by private sector firms with the aim of solving these issues.”
He added, “It’s becoming increasingly evident that they may succeed, as the report correctly points out—big tech firms and fintech start-ups are “experts at delivering convenient, attractive, low-cost and trusted services to a large network of customers.”
The report comes at a time when an increasing number of central banks are reported to be considering issuing their own digital currencies, alongside cash.
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