BIS Study On DeFi Technology Benefits For Central Bank Digital Currencies (CBDC) Despite Cryptocurrency Recession Warnings

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It has taken a while but the world of all things fiat money and banking has started to take note and realize that they can learn from the phenomenal technological advances made in the Cryptocurrency sphere. There is no doubt about that! Instead of ignoring and maligning the industry, financial institutions can rather get a deeper understanding of what can be done and apply these advanced principles and strategies to their own systems and planning in time to come.

Life is better when we all work together towards a common goal! 

Cryptocurrencies Have Potential To Overtake Fiat Ecosystems 

On the basis of information by Cointelegraph, a BIS study from June unveiled that cryptocurrencies can overtake fiat ecosystems when it comes to the achievement of goals with regard to a future monetary system. However, as per an IMF forecast, it predicted a global economic slowdown and raised concerns about an incoming recession in the cryptocurrency markets

Reportedly, world governments see central bank digital currencies (CBDCs) as a way to improve the existing fiat ecosystem. Cryptocurrency’s technical background, with support from the central bank, can be the way to enable a rich monetary system, as suggested by an International Monetary Fund (IMF) publication, as reported by Cointelegraph.

“Digital technologies promise a bright future for the monetary system,” reads the publication, attributed to Agustín Carstens, deputy managing director, IMF, and Jon Frost and Hyun Song Shin, executives, BIS. 

Concerns around cryptocurrencies that prevent them from mainstream adoption, as stated by the BIS executives, have been in congestion with decentralized finance (DeFi) and the trust in volatile assets.

Private Sector Can Use New Technology To Foster Monetary EcoSystem

Moreover, Cointelegraph noted that the post further recommended that central banks should utilize innovations such as tokenization to allow purchases through multiple fiat currencies, to further benefit merchants and customers. 

Previously, the publication reported that Bitcoin (BTC) markets have the potential to recover from the uncertainty around the economy and geopolitical tensions. However, the IMF pointed out that liquidations, bankruptcies, and losses at firms such as Celsius, Three Arrows Capital, and Voyager Digital Holdings had an impact on traditional financial systems and the effect from the impact of it.

Originally published here.

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