IMF Chief Says Central Bank Digital Currencies Can Replace Cash — Urges Public Sector to Prepare for CBDC Deployment
International Monetary Fund (IMF) Managing Director Kristalina Georgieva says central bank digital currencies (CBDCs) can replace cash. She has urged the public sector to “keep preparing to deploy CBDCs and related payment platforms,” emphasizing that these platforms “should be designed from the start to facilitate cross-border payments, including with CBDCs.”
IMF Chief Encourages CBDC Adoption
Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), discussed central bank digital currencies (CBDCs) Wednesday at this year’s Singapore Fintech Festival. The IMF also released a CBDC handbook as a reference guide for policymakers and experts at central banks and ministries of finance around the world.
The IMF chief detailed:
CBDCs can replace cash which is costly to distribute in island economies. They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts.
“CBDCs would offer a safe and low-cost alternative. They would also offer a bridge to go between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks,” she added.
Georgieva explained that many countries “are developing regulation to guide digital money developments.” However, she admitted: “We have not yet reached land. There is so much more space for innovation and so much uncertainty over use-cases.” Citing various benefits of central bank digital currencies, the head of the IMF opined: “In some countries, the case seems dim today, but even they should remain open to potentially deploy CBDCs tomorrow.”
According to the Atlantic Council’s Central Bank Digital Currency Tracker, 130 countries, representing 98% of the global GDP, are exploring a CBDC, with 11 having fully launched a digital currency. In addition, 19 of the G20 countries are now in the advanced stage of CBDC development.
Emphasizing that “this is not the time to turn back,” the IMF managing director stressed:
The public sector should keep preparing to deploy CBDCs and related payment platforms in the future … These platforms should be designed from the start to facilitate cross-border payments, including with CBDCs.
Georgieva also said that artificial intelligence (AI) “could amplify some of the benefits of CBDCs.” She noted: “It could improve financial inclusion by providing rapid, accurate credit scoring based on various data. It could provide personalized support to people with low financial literacy.” However, the IMF chief continued: “To be sure, we need to protect personal privacy and data security, and avoid embedded biases so we don’t perpetuate inequality but aim to reduce it. Managed prudently, AI could help.”
What do you think about the statements by IMF chief Kristalina Georgieva about central bank digital currencies? Let us know in the comments section below.