IMF examines CBDC design in context of Islamic banking, finds some risks magnified By Cointelegraph
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A central bank digital currency can impact monetary policy by increasing money velocity, disintermediation, volatility of bank reserves, currency substitution and altered capital flows, even when it is not designed to do so, according to a study published by the International Monetary Fund. The unintended impact of a CBDC may be felt particularly acute in the Islamic banking system.
The Islamic financial system accounts for less than 2% of global finance, but it is present in 34 countries and systemically important in 15 jurisdictions. Only two countries, Iran and Sudan, have fully Islamic banking systems. Ten countries with an Islamic financial presence, including Iran, are currently considering CBDCs, according to the paper.
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A central bank digital currency can impact monetary policy by increasing money velocity, disintermediation, volatility of bank reserves, currency substitution and altered capital flows, even when it is not designed to do so, according to a study published by the International Monetary Fund. The unintended impact of a CBDC may be felt particularly acute in the Islamic banking system.
The Islamic financial system accounts for less than 2% of global finance, but it is present in 34 countries and systemically important in 15 jurisdictions. Only two countries, Iran and Sudan, have fully Islamic banking systems. Ten countries with an Islamic financial presence, including Iran, are currently considering CBDCs, according to the paper.
Continue Reading on Coin Telegraph
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