Abu Dhabi:First paragraph of the news story.
According to Emirates News Agency, the International Monetary Fund (IMF) has highlighted the transformative impact of stablecoins, digital payments, central bank digital currencies (CBDCs), and tokenisation on the future of finance. These developments are raising significant questions for regulators and policymakers.
In its 2026 Annual Report, titled "Navigating a Precarious World," the IMF noted the expansion of digital finance, which presents both opportunities and risks. Stablecoins have become a focal point, with ongoing progress in tokenisation and many countries advancing their work on CBDCs.
The report indicated that stablecoins have seen robust growth, particularly in cross-border payments and remittances, although their use remains relatively limited. The institutionalisation of blockchain and distributed ledger technologies is underway in major jurisdictions and financial sectors.
However, the IMF warned of potential instability in stablecoins if their underlying assets lose value or if user confidence wanes. Large redemptions could affect markets for government bonds held by stablecoin issuers, raising concerns about financial stability, currency substitution, and financial integrity.
Tokenisation, which involves recording and transferring assets on a digital ledger, is still in its early stages but is moving towards commercial deployment. The IMF cautioned that rapid transaction speeds could lead to 'flash crashes,' with asset valuations fluctuating too quickly for human intervention.
Countries continue to develop CBDCs to harness digital benefits while mitigating risks. The European Central Bank has completed preparations for a digital euro, setting the technical groundwork for its issuance.
The IMF emphasized the importance of countries maintaining their own currencies to utilize monetary policy tools effectively and to combat money laundering and terrorism financing. The IMF also supports establishing coherent global regulatory frameworks for digital finance, including managing stablecoin risks and ensuring payment system interoperability.
Additionally, the IMF provides expertise to help nations manage capital flow volatility and maintain control over exchange rates during turbulent conditions.