November 16, 2023

IMF Head: CBDCs Could Replace Cash

IMF Head

IMF Head

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, encouraged the public sector to continue preparing for the future deployment of central bank digital currencies (CBDCs) and related payment platforms. 

During her opening speech at the Singapore FinTech Festival, Georgieva emphasized the potential of CBDCs to replace cash, provide resilience in advanced economies, and enhance financial inclusion in underbanked communities. According to Georgieva, CBDCs can coexist with private money as a safe and low-cost alternative.

Georgieva expressed her optimism about the implementation of CBDCs worldwide but said, “We have not yet reached the land,” and there is still much uncertainty. Adoption of CBDCs is nowhere close. But about 60 percent of countries are exploring them in some form today.”

During her speech, Georgieva emphasized the importance of having strong technological infrastructure in CBDC projects and the need for personal data protection. She also suggested that artificial intelligence (AI) could play a role in enhancing national digital currencies. 

Georgieva emphasized the importance of cross-border payment support, stating that CBDCs must be designed to facilitate these types of payments, which are currently expensive, slow, and only available to a few. She urged immediate action to ensure that CBDCs are built with cross-border payments in mind. 

She also presented the IMF’s CBDC virtual handbook and highlighted the Bank for International Settlements (BIS) role in digital money experiments in the public sector. 

The IMF has been actively analyzing necessary crypto regulations. On September 29, it proposed a crypto-risk assessment matrix to help countries spot indicators and triggers of potential risks in the sector. The IMF’s Synthesis Paper, which was jointly prepared with the Financial Stability Board, was unanimously adopted by G20 finance ministers and central bank governors in October.

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