Last updated on November 17th, 2022 at 12:46 pm

Despite warning against cryptocurrencies, the International Monetary Fund (IMF) has pointed out that digital assets could be useful replacements for traditional financial instruments.

According to a blog post, some cryptocurrencies and central bank digital currencies (CBDCs) may be more energy-efficient payment methods than credit and debit cards.

The IMF disclosed that several central banks are considering making CDBCs available as physical cards. Hence, there should be a way to reduce energy use. According to the organization, combining real cards with cryptocurrencies and CBDCs will encourage widespread adoption.

Even though the future of money is still uncertain, the IMF said that governments that want to use CBDCs or cryptocurrencies should think carefully about the energy aspect.

The institution thinks that energy use will have a big impact on the future of money, especially when payment systems use distributed ledger technology.

However, the IMF emphasized that digital assets with a consensus mechanism or permissioned systems should be prioritized because proof-of-work (PoW) cryptocurrencies like Bitcoin use more energy than credit cards.

IMF’s Caution on Cryptocurrency

The IMF has previously said that the rise of cryptocurrencies threatens financial stability. The group has asked government leaders to move quickly and pass important laws for the industry.

As a result, the IMF published guidelines to create a unified global regulatory framework for cryptocurrencies. The policies are principally aimed at leveling the playing field for all participants in the cryptocurrency industry.

Interestingly, IMF Chief Economist Gita Gopinath advocated for industry regulation over a ban on cryptocurrencies. The need to safeguard new markets drives her campaign to regulate the sector.

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