The IMF highlighted the advances in digital adoption in Latin America
A recently published report by the IMF highlighted how the region has advanced in the use of cryptocurrencies
The most recent report published on the International Monetary Fund (IMF) portal highlights the advances in digital adoption in Latin America and emphasizes the need to improve the regulation of cryptocurrencies.
The IMF recognizes the region’s progress in terms of digital adoption and commends Latin America and the Caribbean for leading this process. However, it also stresses that more targeted progress needs to be made in regulating cryptocurrencies.
According to the report, Brazil, Argentina, Colombia and Ecuador are among the 20 countries with the highest adoption of cryptocurrencies worldwide. The IMF highlights that these countries seek to reap the benefits of digital adoption, such as protecting against adverse macroeconomic effects, evading capital controls, providing banking services to people outside the formal system, facilitating efficient payment systems, and promoting strong competition.
However, the agency mentions that the adoption of cryptocurrencies in the region poses numerous challenges and risks, especially for countries with histories of macroeconomic instability and corruption.
Rather than impose bans, the IMF suggests the region focus on addressing cryptocurrency demand drivers, such as unmet needs for digital payments, and ensuring transparency in transactions.
The IMF also points out the risks associated with the adoption of unsupported cryptocurrencies, using El Salvador’s experience with Bitcoin as an example.
In contrast, the IMF praises the implementation of central bank-controlled digital currencies (CBDCs), also known as MDBCs, and believes that they could reduce remittance costs and improve financial inclusion without compromising the control of top financial bodies in each country in the Latin American and Caribbean (LAC) region.
The report concludes that, if properly designed, CCDBs can improve the utility, resilience, and efficiency of payment systems, and promote financial inclusion in Latin America and the Caribbean (LAC).
K. Tovar
Source: Cointelegraph
(Reference image source: Anne Nygård, Unsplash)
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