The International Monetary Fund (IMF) in a recent blog post attempted to answer how central bank digital currency (CBDC) projects can effectively coexist with cryptocurrencies that are privately issued. The article was written by Financial Counsellor Tobias Adrian and Deputy Division Chief for Monetary and Capital Markets Tommaso Mancini-Griffoli.
According to the blog post, privately issued crypto assets promote innovation and development while public backed currencies bring about stability in the economic sector. However, both currencies are needed in every economy at every given time and in a varying amount.
They also went on to argue that central banks are at the right position to control the relationships between CBDCs and other crypto assets. Thus, there would be no need for these countries to make a decision of “either/or situation for crypto”
Interestingly, some member countries of the financial institution have consistently clamored against cryptocurrencies due to the growing tension between central banks, financial regulators and crypto assets have been increased lately. A notable example is Germany whose finance minister Olaf Scholz has consistently called on the European Central Bank (ECB) to develop a digital euro. Some members of the ECB, have, however, begun working on their personal CBDC project.
Another example is the United States where an ongoing legal battle between the Securities and Exchange Commission (SEC) and Ripple is an indication of the level of hostilities faced by the crypto industry.