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Governments should harness benefits of digital cash, address risks: IMF – Reuters Canada

FILE PHOTO: International Monetary Fund logo is seen outside the headquarters building during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas

NEW YORK (Reuters) – Policymakers should aim to harness the benefits of digital currencies while addressing their risks and legal challenges, the International Monetary Fund said on Thursday.

“Central bank digital currencies (CBDCs) can strengthen the resilience and efficiency of payment systems at lower costs, (allow) faster settlements, greater competition and increase financial inclusion,” Gerry Rice, the IMF’s head spokesman, said at a news conference.

CBDCs are the electronic equivalent of banknotes or coins, giving holders a direct claim on the central bank and leapfrogging commercial banks.

Rice said policymakers “should strive for a balanced approach to digital money” in order to harness the benefits and address the risks, including operational cyber security risks.

“Public and private digital currencies can reduce the cost of doing business, improve productivity, financial inclusion and market integration.” Rice said. “On the other hand, they can undermine bank funding, data privacy and cyber security. So, forward-looking supervision and regulation can help to contain these risks.”

Reporting by Rodrigo Campos; editing by Jonathan Oatis

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