Researchers at the International Monetary Fund (IMF) have reviewed the central bank regulations of 174 IMF members to respond to the concern of whether a digital currency is really money. They located that of all the reserve banks examined, only concerning 23%, or 40 reserve banks, “are lawfully enabled to release digital money.”
IMF Explores if Digital currency Is Money
The IMF published an article on Thursday examining whether digital money is really money in the legal sense. The blog post is authored by Catalina Margulis, a consulting counsel in the IMF Legal Department’s Financial and Fiscal Law unit, and Arthur Rossi, a research officer in the same unit.
Expressing their very own opinions, the writers started by observing that “close to 80 per cent of the world’s central banks are either not enabled to issue a digital currency under their existing laws, or the legal framework is unclear.” They continued:
To assist countries to make this evaluation, we evaluated the central bank laws of 174 IMF participants … as well as learnt that only about 40 are legally allowed to issue electronic currencies.
Prior to the publication of this article, the IMF carried out a survey on Twitter asking people to vote on whether they think digital currencies are really money. Out of 95,256 votes collected, 79.9% said yes.
What Certifies as Currency
The IMF researchers noted that “To legally qualify as currency, a means of payment must be considered as such by the country’s laws and be denominated in its official monetary unit. A currency typically enjoys legal tender status, meaning debtors can pay their obligations by transferring it to creditors.”
” Therefore, legal tender status is usually only given to means of payment that can be easily gotten and also used by the bulk of the populace. That is why banknotes as well as coins are one of the most common forms of currency.”
The writers noted that to “make use of digital currencies, digital infrastructure– laptop computers, smartphones, connectivity– must first be in place.” However, they pointed out that “governments cannot impose on their citizens to have it, so granting legal tender status to a central bank digital instrument might be challenging.”
The IMF team also pointed out some legal issues raised by the creation of central bank digital currencies (CBDCs). Among the areas of concern are “tax, property, contracts, and insolvency laws; settlements systems; privacy and data protection; most fundamentally, preventing money laundering and terrorism financing,” the IMF researchers described.
In conclusion, while bearing in mind that “Without the legal tender designation, achieving full currency status could be just as tough,” the scientists stressed:
Several methods of payments extensively used in developed economies are neither legal tender nor currency.
Source: Newsbitcoin
