IMF Economist Says Crypto Will Not De-throne The Dollar

Over the last several years cryptocurrencies gained value and respect, however, this won’t make the U.S dollar give up its throne, according to the words of chief International Monetary Fund (IMF) economist Gita Gopinath.

On January 6 she said to Financial Times “Improvements in payment technology may have lowered the cost of switching from cash to digital payments, but there is little evidence they have done much to reduce the expense of moving among currencies.”

She also added that “Widely-held perceptions of the dollar’s safety and stability have kept it dominant in the international monetary system for decades.”

Regulatory aspects and adoption of digital currencies

In June 2019, Facebook announced its own currency Libra backed by a bunch of bank deposits and short-term government securities. The uncertain nature of Libra ignited much regulatory controversy.

In addition, countries such as China have joined the trend, developing their own digital currencies.

“While these are intriguing possibilities, they are improbable in the near-term,” Gopinath noted.

Why is USD so resilient?

Gopinath addressed the U.S dollar supremacy in trade and banking systems worldwide and the stable increase in its usage as some kind of domino effect.

The economist also mentioned Euro, which failed to surpass USD, considering a vast depth of nuances which make the national currency prosperous and dominant.

Gopinath stressed that U.S dollar’s strength rests on institutions and investor safeguards.

Overall, Gopinath clearly stated that any digital currency seeking global dominance will stumble upon numerous obstacles.

These statements may soon be put to test, as IBM believes that first central bank digital currency will appear in five years.