[Music] hello folks you have reached The Cryptocurrency Portal and today I’m going to go through some information that came out from the International Monetary Fund or the IMF a lot of people hear about the IMF but they don’t know what the IMF is or what they do so I’m gonna do a quick overview about the IMF and then go into the rest of the articles that I wanted to discuss a review we’re only going to go over this part if you want to check it out yourself go google it go to Wikipedia what have you so the International Monetary Fund IMF is an international organization that is headquartered in Washington DC and it consists of 189 countries working to foster global monetary cooperation that’s crazy I’m a 118 I don’t know off the top of my head how many countries there are in the world that is a huge huge supermajority of countries in the world they also want to secure financial stability facilitate international trade promote high employment and sustainable economic growth and reduce poverty around the world why periodically depending on the World Bank for its resources it was formed in 1944 at the Bretton Woods conference primarily by the ideas of Harry Dexter white and John Maynard Keynes it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the International payment system it now plays a central role in the management of balance of payments and difficulties in international financial crisis countries contribute to the fund to pull through a quota system force the country’s experienced balance of payments problems can borrow money as of 2016 the fund had XDR 477 billion about the United States equivalent of six hundred and sixty-six sixty-seven billion through the fund and other activities such as the gather of statistics and analysis surveillance of its members economies and the demand for particular policies the IMF works to improve the economy it’s member-countries the organization’s objectives stated in the articles of the agreement are to promote International Monetary cooperation international trade high employment exchange rate stability sustainable economic growth and making resources available to member countries in financial difficulty I am a funds come from two major sources quotas and loans quotas which are pooled funds of member nations generate most IMF funds the size of a member’s quota depends on its economic and financial importance in the world nations with larger economic importance have higher quotas the court has increased periodically as a means of boosting the IMF’s resources the current managing director and chairwoman of the IMF fund is Bulgarian economist Kristalina Georgieva who has held the post since October 1st of 2019 so that’s just kind of a very quick overview of the International Monetary Fund just so you have a flavour what they do before we go into some of the Articles that I want to discuss today but there’s so much more to the IMF so go do your research on the IMF overall so with that said the first article that we wanted to go over today is the IMF cautiously approve central bank digital currencies as you see here says the IMF has recently recommended two central bank’s worldwide to explore the introduction of central bank digital currencies but to proceed with caution the CB DC could prove useful to central banks in its most recently weekly blog posts the IMF suggested that CBBC have a number of benefits these include reducing the costs of managing monetary policy and helping the unbanked get included in the financial system from which legacy banking has excluded them that is a huge there’s billions of people that aren’t even banked in this world it’s unfathomable in certain countries that are completely banked so other countries that aren’t banked and we can have billions of people that can enter into the system so it’s amazing that there’s systems in place that are attempting to put them back in – in terms of the conclusion interestingly the organization suggested that some central banks are concerned by the increasing concentration of the payment system in the hands of a very few large companies some of which are the foreign in this context some central banks of UCB DC as a means to enhance the resilience of their payment system the Washington based organization has had a colorful relationship with crypto currencies with one-time Managing Director Christine Lagarde suggesting authorities fight fire with fire in pursuing cryptocurrency crime she was she was later to speak the benefits crypt assets so she came around she had those thoughts and comments before but once she educated herself she became a big proponent and now she’s moved on to another I think it’s the European Central Bank that she’s actually the managing director present or chairwoman of but she kind of moved up in the world the International Monetary Fund has a new chief in Bulgarian economist Kristalina Georgieva so it says proceed with caution however the 189 country organization has warned central bank’s to proceed with caution outlining various risks of issuing central bank digital currencies among them the most prominent are risks to the banking system with countries as the IMF says deposits could be withdrawn from commercial banks should should people decide to hold CVD C in significant volume note an increase in central bank interest since Facebook’s Libra announcement that’s so true once Facebook Libra and they make Facebook me the the kind of update and the announcement of Libra youbefore against the Facebook in this moment that doesn’t matter it’s just interesting how many more people started paying attention because they they know that Facebook actually moves forward in some capacity and gets some traction that they have so much reach because of how big their platform is they can make and do a lot of damage the IMF now sees centrally issued current cryptocurrencies as having the potential to play a positive role in economic life and monetary policy management its previous position on existing cryptocurrencies was far less positive as I was reporting so they think it’s positive now so now let’s go to the IMF blog now we go over for questions and answers in this IMF blog so it’s directly from the International Monetary Fund’s website again their website has IMF org and just go to their blog and you can see this for yourself but it says central bank digital currencies for questions for answers so let’s go over these four questions and four answers together and it says central bank digital currencies or CB DC is a complex and multidisciplinary topic requiring active analysis and debate it raises questions related to monetary policy central banking operations and payment systems as well as financial stability and legal foundations and regulations below are some of the most pressing questions and answers on the topic so here’s the first question what is the IMF’s role around C BDCs now and in the future the IMF can help in three ways by informing the policy debate by convening relevant parties to discuss Poly’s policy options and by helping countries develop policies because C VDC is a novel topic the IMF has mostly been active in the first two areas but is gradually moving forward into the third area as member countries consider CB d see options and seek advice first the IMF can help inform the policy debate the IMF is currently investigating implicant implications of the CB DC available across board now other institutions such as the Bank for International Settlements and the Committee on payments and market infrastructure among others have also contributed to the topic the IMF is well-placed to study CB DC because it can draw on its in-house experts moreover a potential world with multiple multiple CB dcs could raise important questions about cross-border payments in the international monetary system which are at the core of IMF s mandate you see a quote they’ve highlighted here each country will have to weigh the pros and cons of the case for CB DC depending on as particular circumstances now second the IMF is well-positioned to help foster cooperation across countries and relevant parties the IMF can draw on its universal membership to share information about rapidly evolving developments across advanced and emerging market economies moreover because the IMF is a public international institution it can bring together central bankers and regulators as well as investors entrepreneurs and academics from around the world for an open dialogue now it has done so repeatedly at US by yearly meetings in its yearly FinTech roundtable and in its ad-hoc research events third the IMF can help countries evaluate policies regarding the CBC as well as investigate alternative means to improve payment systems the IMF can do so so through its surveillance work its financial sector assessment programs and its technical assistance which hasn’t been a long tradition of providing IMF teams have already worked with countries to modernize payment systems advise on legislation related to digital payments and review plans to issue CBD C the IMF can control countries think through the implications of CBD C and its attendant potential benefits and risks including through regional workshops leveraging knowledge and central banks at the frontier of CBD C development on bilateral technical assistance missions question to remember there’s for questions but question to how does the IMF view global development and implementation of C BC countries differ substantially in the extent to which they are actively exploring digital currencies and in their proximity to issuing such currencies some countries are actively running pilot projects to explore the feasibility of CBD C and to do so they’ve increased resources allocated to CBD C and fin tech research at the central bank sometimes in partnership with with private sector advisors some countries are also reviewing and revising legislation to support C BC in case it will issue and are actively studying the potential implications of competing see PDC designs some authorities are also engaging with the public and their legislators to discuss the potential to issue CBD see some other countries have also scaled up resources resources dedicated to CBD C and payment systems although they mostly focus on undertaking an analysis and more limited hands-on testing of technology although CBD C remains an option for these countries they are also actively exploring alternative solutions a third set of countries do not see an immediate need to issue CBD C and focus instead on improving existing payment arrangements and strengthening regulation recently we have seen an increase in central bank’s interest in CBD C following the announcement by Facebook of the Libre initiative again Facebook’s Libre initiative it probably really helped just continue to jumpstart the whole industry because people really start paying attention it could be like oh wow look Facebook might begin involved or – oh my gosh Facebook’s are involved we need to get going as well as other reports of a possible launch of CBD see by the the People’s Bank of China with that said the United States need to be careful because the other countries like China in even India to a lesser degree are moving forward in a positive way in terms of regulations etc so if the United States does is not careful they’ll be left behind so here’s question 3 of 4 what are the potential benefits and challenges related to CBD C implementation central bank’s highlight a number of potential benefits of CBD C they include bullet 1 cost of cash in some countries the cost of managing cash is very high due to an especially vast territory or particularly remote areas including small islands and CBD C couldn’t lower costs associated with providing national means of payment next bullet Financial Inclusion CBD C may provide a safe and liquid government back means of payment to the public that does not require individuals to even all the bank account some central banks view this is an essential in a digital world in which cash use is progressively diminishing especially in countries where banking sector pension penetration is low next bullet stability of payment systems some central banks are concerned by the increasing concentration of the payment system in the hands of very few very large company some of which are foreign in this context some central banks view CB DC as a means to enhance resilience of their payment system next bullet market contestability and discipline relatedly some central bank’s views CBD see as a potential offering competition for large firms involved in payments and thus as a means to cap the rents they can extract next bullet countering new digital currencies some central bank’s view CB DC is healthy potentially necessary competition against privately issued digital currencies some of which may be denominated in foreign currencies these central banks believe a domestically issued digital currency backed by the government denominated in the domestic unit of account would help reduce or prevent the adoption of privately issued currencies which may be difficult to regulate next bullet support distributed ledger technology or DLT some central banks see the virtue of DLT base CB DC to pay for DLT based assets if these assets proliferate DLT based currency would facilitate automatic payments when assets have delivered so-called payment versus delivery or payment versus payment which could be automated using smart contracts some central banks are considering the option of providing CB DC only to institutional market international implications c VDC of reserve currency countries available across across borders could increase currency substitution dollarization in countries with high inflation and volatile exchange rates these prospects need to be studied further along with the employment implications for the international financial system I am a staff are currently in these questions costs and risks to the central bank offering CBBC could be very costly for central banks and it could pose risks to their reputations offering full-fledged CBD C requires central bank’s to be active among along several steps of the payments value chain potentially including interfacing with customers building front-end wallets picking and maintaining technology monitoring transactions and being responsible for anti money laundering and countering the financing of terrorism failure to satisfy any of these functions due to technological glitches cyber attacks or simply human error could undermine the central bank’s reputation in summary each country will have to weigh the pros and cons of the case for CB DC depending on its particular circumstances countries may consider the option of public-private partnerships that may achieve many of the same benefits of CB DC while potentially reducing Central Bank involvement and operational costs I am eff staff coined the solution synthetic CB DC more specifically to wrap up this one the synthetic CB DC model envisions private sector firms issuing digital coins to the public which should it be it can either be accounts or tokens leveraging DLT these firm would thus be responsible for what they do best innovating and interfacing with customers the central bank instead would provide trust to the system by requiring that coins be fully backed with central bank reserves in my serve supervising the coin issuers Wow this is a very interesting the arrangement this arrangement preserves the comparative advantage of each participant whether it is a private sector firm or a central bank and induces competition among private sector firms to offer attractive coins and interfaces at the same time it limits costs to the central bank as well as some risks last question what are the alternatives to CB DC several countries are working on improving existent payment systems to match the speed and convenience other digital currencies for example we understand from published sources that the Federal Reserve this the United States is developing so-called fast payments allowing near-instantaneous and a low-cost settlement of interbank retail payments the Federal Reserve’s Fed now initiative in other countries similar systems have improved payment services and injected competition and payments especially if paired with other reforms such as public digital identities common communication standards open application programming interfaces api’s application program interface API SS which allow banking applications to interoperate and to be extended by third-party developers and data Portability and protection standards while improve interbank payment systems will bring many of the potential benefits discussed above CB DC could be complementary especially in some jurisdictions central banks have raised the following arguments first CB DC or synthetic version can be DLT base and thus potentially help spur the development of DLT based asset markets second CB DC can be designed to work outside the banking system and thus favour financial inclusion and third CB DC could provide competition to banks and induce these to fully leverage the advantages of fast payment system and forth a DLT based cbc could facilitate cross-border retail payments thereby complementing they’re not so easy task of linking traditional interbank payment systems and they say we generally think that central banks should remain engaged in examining the full range of issues associated with CB d c– including but the potential to offer synthetic cv DC and deepen their familiarity with new technologies so that’s the latest from the cryptocurrency portal folks we wanted to go over the latest with IMF and and how they cautiously approve CB DC’s kind of go through their blog here and talk about their four questions and for answers so we thought it was a good little update we wanted to bring to the community think so again thank you for tuning in we deeply appreciate if you already subscribe to the channel thank you we really appreciate it if you’re not a subscriber hopefully this video proved to you that we give good topics and good discussion points to discuss and we’d be honored with your subscription to the channel if you like this this video please just smash that thumbs up button we’d really appreciate it and give us a little comment in the comment section below so we can just get a little discussion going about the IMF and central bank’s and central bank digital currencies so thank you so thank you again for tuning the cryptocurrency portal a deeply appreciated [Music]