The International Monetary Fund (IMF), the World Bank, and the Bank for International Settlements (BIS) have voiced their support for central bank-backed digital currencies (CBDCs), arguing that its adoption could foster global development.
In a paper jointly released by the three institutions on Friday, they claimed that projects like the United States digital dollar would ease global development by eliminating dependence on the costly and time-consuming transfer services currently being used for financial transactions around the world.
Indermit Gill, the Group Vice President of equitable growth, finance, and institutions for the World Bank said:
Faster, cheaper, more transparent and more inclusive cross-border payment services would deliver benefits for citizens, businesses, and economies worldwide.
The G20 study also considered the risks associated with using digital currencies, stressing that easy cross-border transactions “could increase risks for runs on both local banking sectors and currencies.” According to Gill, the risks are particularly obvious for emerging markets and developing nations.
The use of digital currencies will undoubtedly enable easier communication and exchange between retailers and banks.
With China taking the lead, several countries have made efforts to join the race to launch a CBDC. A few days ago, Ukraine passed a law that places the country’s CBDC on the same level as fiat.