Should central banks issue digital currency? Suddenly, it’s an urgent question.

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Stable digital currencies—and particularly Facebook’s plans to launch one—have central bankers playing defense.

For years, powerful central banks around the world have claimed to be studying digital currencies, and most have left open the possibility that one day they might launch their own. That day may be dawning—much earlier than anyone expected.

In a recent blog post, IMF economists Tobias Adrian and Tommaso Mancini-Griffoli called on policymakers to take “prompt regulatory action” to address the “notable risks” posed by privately issued digital currencies, called stablecoins, that are designed to maintain a consistent value. More to the point: central banks may need to get into the stablecoin business themselves.

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At least 15 central banks are serious about getting into digital currency

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Digital cash may soon start replacing the physical kind.

The market for digital currency is down, but it’s certainly not out. Even if private cryptocurrencies are falling in popularity, it appears likely we are headed toward an era of national digital currencies that are backed by central banks.

Central banks are the institutions that set monetary policy for a nation, manage inflation, and act as the “lender of last resort”—such as the Bank of England in the UK and the Federal Reserve in the US. In fact, no fewer than 15 such central banks around the world are taking the idea seriously, and many others are at least exploring it, according to a recent report from the International Monetary Fund (IMF).

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Mastercard will support cryptocurrencies – as long as they’re backed by governments

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It seems Mastercard is gradually softening its stance on cryptocurrency, after CEO Ajay Banga downplayed non-government mandated digital currencies as “junk” back in October last year.

In a conversation with Financial Times, Ari Sarkar, Mastercard co-president for the Asia-Pacific region, said the company is open to explore cryptocurrencies created and backed by governments.

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Cryptocurrency Will Replace National Currencies By 2030, According to This Futurist

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The cryptocurrency market, which trades various digital-based coins, can look exciting, scary, and mysterious all at once to the casual observer. Its pioneer, Bitcoin, dramatically surged in value and steeply dropped (before picking back up) in recent months. ICOs (initial coin offerings for new cryptocurrencies), meanwhile, are emerging at a head-spinning rate.

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