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  • Stablecoins feature minimal volatility relative to that cash.
  • Central banks should consider giving stablecoin provider access to their reserves.

The International Monetary Fund has always been open  to the encroachment of cryptocurrencies into the global financial systems. In many ways, it has always had a different view from that of central banks when it comes to the topic of digital currencies.

In the latest IMFBlog, says that if stablecoins were to encroach more on fiat systems, for instance, cash and bank deposits they will surely catch the attention of policymakers who will cease to watch from the sidelines.

An earlier IMFBlog discussed stablecoins at length describing them as cryptographic tokens that are simple to exchange and feature low volatility levels relative to that of cash. If the types of assets are introduced into the social fabric, they could drastically change the way people pay for services due to their cheaper, faster and user-friendly qualities. Above all these, they will require “prompt regulatory action” due to the risks they carry with them. The IMF suggests:

“One possible regulatory path forward is to give stablecoin providers access to central bank reserves. This also offers a blueprint for how central banks could partner with the private sector to offer the digital cash of tomorrow””called synthetic central bank digital currency (sCBDC).

The blog post continues to provide another suggestion which could allow  “stablecoin providers to fully back coins with central bank reserves””the safest and most liquid assets available.”

Whether central banks can implement the suggestions made by the IMF regarding stablecoins is a matter that will have to be seen.