Crypto: The IMF recommends stablecoins to boost the economy!

A wind of change is blowing over the remote islands of the Pacific, threatening to disrupt the established monetary order. Carried by the surging wave of crypto, this promising but controversial upheaval could, according to a groundbreaking IMF report, reshuffle the financial power deck 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 who have historically been excluded from the traditional banking system. Anchored to currencies like the dollar, these digital tokens could circumvent geographical and institutional barriers, facilitating access to basic financial services. Moreover, their cross-border transfers would be faster, safer, and less expensive, assisting migrant workers.  

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

CBDCs, the Secret Weapon of Island Central Banks?

In the face of the diffuse threat of private stablecoins, numerous voices are advocating for the sovereign option of central bank digital currencies (CBDCs). According to the IMF recommendations, for insular states that already have a national currency, adopting a CBDC backed by it would allow them to maintain control over the national virtual purse strings.

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

But beyond practical and ecological benefits, these cryptos would especially offer monetary authorities an unprecedented level of control and traceability over national financial flows. Allowing for real-time monitoring and extreme granularity of transactions, these new digital standards could definitively supplant physical currencies in favor of total surveillance of monetary flows by the issuing state.

Private stablecoins and central bank digital currencies raise significant questions about the financial sovereignty of Pacific islands. Private stablecoins could increase their dependence on foreign powers, while local CBDCs would preserve their monetary control but could threaten individual liberties. Faced with these complex issues, island leaders must choose whether to embrace or reject this uncertain crypto revolution. A promising yet risky monetary future unfolds for this economically marginalized region.