The International Monetary Fund (IMF) stands as an organization established back in 1945, consisting of 189 countries. The goal of the IMF is to secure financial stability, as well as foster monetary cooperation across the globe. In a recent tutorial, the IMF gave an explanation regarding the current problems surrounding the standard centralized payment solutions. Alongside this, the group also provided information about cryptocurrencies, such as their drawbacks, benefits, and how it could serve as money’s future, in time.
What are cryptocurrencies? https://t.co/ggONlLkA2r pic.twitter.com/yYpj3Jf37E
— IMF (@IMFNews) August 23, 2020
In its explanation, the IMF highlighted how payments for when we buy or sell things are, more likely than not, processed by a credit card company or bank. These entities, in turn, take a cut from the transaction as well. The premise behind is that these groups protect sensitive information from hackers. The IMF further highlighted how expensive and time-consuming international payments can be, as well.
The IMF explained that the answer to these problems could potentially be a new kind of currency. This special currency should be secure and based within cryptography’s science. This, in turn, will see the information’s protection by way of complex encryption and mathematics. The IMF used this to describe cryptocurrencies and noted that they only exist within computer networks.
Explaining The Drawbacks
However, the organization was quick to point out how this isn’t a perfect solution. There are several risks to cryptocurrencies, which the IMF pointed out. The first of which is some of these cryptocurrencies completely untraceable and anonymous, which allows for criminal elements to transfer money without notice of the relevant authorities.
Alongside this, should a wallet’s password be lost, the funds within said wallet is lost forever. Another key problem with cryptocurrencies, is most of them are based on pure speculation. What this means for someone who uses it, is that the volatility is far higher than standard fiat currencies. Even if the IMF highlighted all of these risks, it was quick to state that it still stands as a potential next step for money’s evolution, should these risks be countered.
Fed Boosting Inflation
Alongside this, the crypto space has been dominated by news that the Federal Reserve has a new attitude towards inflation, doing so through a significant shift in policy. Jerome Powell, the chairman of the organization, had revealed that the Fed is planning to allow for inflation to “moderately” rise, going above 2%. This comes as the central bank is trying to prioritize increasing the broad-based employment within the country.