A recent IMF post was extremely favourable towards countries in Latin America and the Caribbean using central bank digital currencies, while denigrating El Salvador’s adoption of Bitcoin.
According to a post by the International Monetary Fund, several Latin American and Caribbean (LAC) countries are making progress in the implementation of central bank digital currencies (CBDCs). Brazil, Argentina, Colombia, and Ecuador are among the top 20 countries expected to adopt crypto assets in 2022. However, the post also highlighted some perceived disadvantages of these potential adoptions.
“crypto asset adoption also presents numerous challenges and risks, particularly for vulnerable LAC countries with a history of macroeconomic instability, low institutional credibility, substantial capital flows, corruption, and extensive informal sectors.”
The IMF authors highlighted the adoption policies of the Dominican Republic and Argentina, which have banned the use of crypto assets due to concerns over financial stability, currency and asset substitution, tax evasion, corruption, and money laundering. Interestingly, the IMF itself compelled Argentina's central bank to include an anti-crypto clause in its agreement for a recent IMF bailout. According to the IMF, half of the government officials surveyed in the LAC region were considering retail and wholesale CBDC options.
“Most survey participants viewed CBDCs as a means to enhance their payment systems and broaden their access. They deemed financial inclusion and monetary sovereignty as crucial factors in favor of retail CBDC issuance by facilitating the integration of unbanked individuals and curbing currency substitution towards stablecoins or crypto assets.”
However, the IMF admitted that CBDC takeup was “slow” for the ECCU and the Bahamas, and stated that it was for this reason that these countries must promote CBDC adoption and raise public awareness of them.
IMF promotes CBDCs but also emphasizes crypto risks. Opinion
The IMF has traditionally been a strong proponent of fiat currencies, with a particular emphasis on the US dollar. Its lending practices to developing countries over the past few decades have been criticized for perpetuating debt enslavement. IMF promotes CBDCs but also emphasizes crypto risks.
Despite acknowledging the benefits of the crypto industry, the IMF views crypto assets as a threat and seeks to prohibit and suppress them at all costs. The recent success of El Salvador's bitcoin adoption strategy may be causing concern among IMF officials.
If the IMF is successful in persuading countries in the LAC region to adopt CBDCs, it is likely that citizens will be subjected to increased control and oppression. However, it is hoped that citizens will be well-informed enough to reject CBDCs, as evidenced by the low adoption rate of the eNaira in Nigeria, where only 0.5% of the population uses it as a transaction option despite cash shortages.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Comments