IMF To Warn Central Banks That Payment Narratives are Shifting Away From Them
Central bankers and finance ministers are set to come together for the World Bank annual meeting, and the IMF has some strong advice for them: regulate digital currencies or watch your monetary monopoly lose power. Sources at Bloomberg believe the IMF has finally understood that the shift from a bank-based system to a payment based system serves the public’s needs and gives them a variety of other benefits that a bank cannot, October 16, 2019.
Thinking Big, Moving Slow
As previously reported by BTCManager, many supernational agencies and economists believe that the real threat to the global financial system’s current implementation is stablecoins.
Governments that are unable to absorb and execute on this new wave of disruption will end up getting disrupted themselves.
The IMF believes there are two near term drivers that will portray the shape stablecoins and payments are taking: the state of online payments and Libra.
Online payments through the current system are incredibly inefficient. There are high fees and long delays when using a credit card online. Aaron Klein, a fellow at the Brookings Institute, claims the American payment system is a reverse Robinhood that takes money in the form of fees and penalties from the poor and deposits it with the wealthy.
The Federal Reserve is building its own real-time payment system called ‘FedNow‘. This platform doesn’t play on the shift from banking to payments; it still relies on the oligopoly of the banking cartel. Moreover, it is estimated to take 3-5 years to ship.
Is This the End of an Era?
Looking at the shift in narratives and preferences, along with the willingness of regulators and monetary authorities to allow new innovation to thrive, it seems like the United States is losing its widely desired first-mover advantage.
When the internet came along, the United States embraced it with much more vigor than any other country. This was a driving factor for the country establishing dominance over internet-based businesses.
Digital currencies and payments seem to have hit a soft spot for domestic monetary bodies. Their inability to let a certain amount of control slip out of their hands could very well end with them having that control forcibly taken.
This is the time for other countries to step up and show their willingness to nurture innovation and serve the public. This may just reverse the multi-era American hegemony over global capital markets and regulatory standards.