Crypto: The IMF recommends stablecoins to boost the economy!

A wind of change is blowing across the remote Pacific islands, threatening to upend the established monetary order. Driven by the surging wave of crypto, this promising but controversial upheaval could, according to a shattering IMF report, redistribute the cards of financial power in this long-marginalized region.

Crypto (Stablecoins), a Trojan horse for monetary sovereignty?

For IMF experts, stablecoins offer a real opportunity for financial inclusion for islanders. These have historically been excluded from the traditional banking system. By anchoring themselves to currencies like the dollar, these digital tokens would bypass geographic and institutional barriers. They would facilitate access to basic financial services. Additionally, their cross-border transfers would be faster, safer and cheaper, helping migrant workers.

However, for some guardians of sovereignty, the mass adoption of crypto would represent a monetary Trojan horse. By importing these private virtual standards backed by foreign currencies, island economies would increase their dependence on dominant powers. This transition would only be a slow shift towards a new digital colonialism, making the islands dependent on private transmitters and state allies.

CBDCs, the secret weapon of island central banks?

Faced with the widespread threat of private stablecoins, many voices are being raised to defend the sovereign option of central bank digital currencies (CBDC). According to the recommendations of the IMFfor island states already having a national currency, the adoption of a CBDC backed by the latter would make it possible to maintain control over the national virtual purse strings.

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Unlike private stablecoins which rely on foreign currency reserves, CBDCs would be directly issued and guaranteed by island central banks. They would thus constitute a purely digital evolution of existing fiat currencies, removing the costs linked to the production and management of physical cash.

But beyond the practical and ecological advantages, these cryptocurrencies would above all offer monetary authorities an unparalleled level of control and traceability over national financial flows. By allowing real-time monitoring and an extreme level of granularity of transactions, these new digital standards could definitively supplant physical currencies in favor of total surveillance of monetary flows by the issuing State.

Stablecoins and central bank digital currencies raise important questions about the financial sovereignty of the Pacific Islands. Private stablecoins could increase their dependence on foreign powers. While local CBDCs would preserve their monetary control but would threaten individual freedoms. Faced with these complex issues, island leaders will have to choose between embracing or rejecting this crypto revolution with uncertain consequences. A promising but risky monetary future is emerging for this economically marginalized region.

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