The International Monetary Fund (IMF) recognizes that the use of digital currencies in today’s era offers many advantages. The use of that currency provides the potential to make financial services much more inclusive. “We have seen some advantages of digital currency during last year’s recession especially when fiscal authorities in China used electronic means to target fiscal support to certain consumers in a helpful way.
They (digital money) lower transaction costs in holding cash and moving cash They can make it safer,” said Helge Berger, Head of Mission and Assistant Director of the IMF in China at the Asia and Pacific Department. However, he warned that there are risks that must be considered and considered in the use of the money. One of them is security risk. When you switch from printed currency to electronic currency, you need to have an operational framework around it that involves networks and computers and security protocols. We have to learn how to do this safely,” he said.
Apart from security concerns, there are also international risks to keep in mind. “If electronic currency makes it easy to use one country’s currency in another, then there are complications related to currency substitution, which can impact the ability of national central banks to control domestic money supply, domestic credit and inflation,” he said. Berger said a number of central banks are now experimenting or thinking about launching digital versions of their currencies. One of them, China.