As the world moves towards a cashless society, digital money presents many challenges, particularly for policymakers and governance bodies. However, problems have already surfaced in the ecosystem, threatening the integrity of stablecoins. Most notably, the largest stablecoin in the cryptocurrency market, Tether, has been accused of co-mingling corporate and client funds. In addition, it relies on a reserve backup to ensure a 1:1 peg to the U.S. dollar, which could have been compromised if a failure occurred.
Issues
The study of digital money reveals how it enacts social class and ethnic politics, technological barriers, and data capture. While financial inclusion has been a failure, cultural practices of money have proven successful. The issues surrounding digital money in everyday life will be discussed in the next chapter. In the meantime, there are a number of ways in which digital money could be more beneficial. Here are some ideas to consider. The digital money movement is likely to have profound implications for social change.
Despite its potential for improving the lives of people, the widespread adoption of digital money is fostering greater economic inequality. Disparity and inequality are already visible, and digital finance is amplifying existing ones. The growing digital economy has been responsible for widespread indebtedness and questionable uses of consumer data. Meanwhile, bitter technopolitics has fueled public debate. For example, the close relationship between the Kenyan government and Safaricom has led to conflict. Furthermore, taxes are being raised for digital money transfer services.
Potential
Facebook parent company Meta is exploring the potential of digital money. The cryptocurrency it’s issuing is called Zuck Bucks. Originally called the Libra coin, it was rebranded as the Diem after a public backlash from financial regulators. While Zuckerberg has spoken of the importance of e-commerce and creating an immersive online world, he declined to comment on specific innovations. Nevertheless, he does see the potential of this new technology.
In the future, digital money will replace fiat currency issued by central banks. It will be free to move across borders. Central bankers worry that digital money may eventually replace fiat currency and erode their control over monetary aggregates and money supply. This article explores the challenges posed by the potential of virtual currency systems in the future of monetary policy. A stable monetary regime is expected to provide resilience against risks of monetary instability and structural ‘deflation.’
Regulations
The bill aims to regulate the exchange of cryptocurrency and other forms of digital money.
Among other things, the bill amends several provisions of law related to public safety, law enforcement, juvenile and adult corrections, lending money, and rehabilitation. The bill also includes cryptocurrency within the definition of money. In addition, the bill also modifies the definition of money. As such, the bill will not only affect the exchange of digital money, but also its use in the real world.
The AMF wants to adopt EU-wide regulations to control digital money. The Paris-based monetary agency ESMA is attempting to strengthen investor protection across the EU and foster cooperation between member states. An AMF proposal would seek to capitalize on ESMA’s experience in regulating digital currencies and provide legal certainty for digital currency companies in the EU. However, the AMF is not interested in enforcing these regulations.
IMF role
With the increasing adoption of digital money, the IMF has a responsibility to monitor and advise governments on the transition to this new form of currency. Every element of the IMS depends on the adoption and design of digital money policies, which fall under the multilateral surveillance mandate and Article VIII, Section 2(a) and 3.4. With its unique ties to member countries, the IMF is uniquely positioned to assist with the transition.
Digital money may allow for regional pooling, sharing and disbursement of official foreign reserves. In addition, it may make regional backstops more credible and lead to greater cooperation among them. However, the IMF cannot provide these services without further guidance. In addition, the Fund’s role in digital money is uncertain. It will be difficult to provide guidance on this new form of currency, and it will be necessary to engage experts in order to reflect on the interrelated implications.