(MENAFN- AzerNews)
Abbas Ganbay Read more
The IMF's“Central Bank Digital Currency Virtual Handbook”
published last week, pointed out that the increased use of CBDCs
can“reduce dollarization” of the global economy-a situation where
countries move away from relying on the U.S. dollar as a reserve
currency, Azernews reports.
De-dollarization would push up borrowing costs in the United
States, making loans expensive for businesses and individuals, thus
affecting economic growth. Stock market values can also crash,
reducing the savings and investments of Americans.
In addition to de-dollarization, a CBDC“could increase the
risks of flight to safety from retail bank
deposits in periods of
market stress.” During times of market volatility, customers
withdraw their deposits and move them into safe assets to avoid
losing money in scenarios like bank
collapses.
If CBDCs were available, pulling out funds from a bank
and
putting them in such assets would come across as a safe option for
many people, thus triggering a bank
run.
The organization pointed out that CBDCs could offer“a safe
store of value and efficient means of payment, which can increase
competition for deposit funding, raise bank
s' share of wholesale
funding, and lower bank
profits.”
The IMF handbook was published as the organization's director,
Kristalina Georgieva, promoted the use of CBDCs during the
Singapore FinTech Festival on Nov. 15, arguing that such digital
currencies could bring an end to the cash-based economy.
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