IMF’s Georgieva: Digital currencies could replace cash, but will take time
At the Singapore FinTech Festival, Kristalina Georgieva, managing director of the International Monetary Fund, spoke about the potential of central bank digital currencies (CBDCs). She stated that while CBDCs have the potential to replace cash, their adoption could take time.
Georgieva highlighted the advantages of CBDCs, pointing out that they could offer a low-cost alternative to cash and improve financial inclusion. She also mentioned that several central banks have already launched pilots or issued a CBDC.
Global Interest in CBDCs
According to the IMF, more than 100 countries are exploring CBDCs, which is approximately 60% of countries in the world. However, as of June, only 11 countries have adopted CBDCs, with an additional 53 in advanced planning stages and 46 researching the topic, according to data from the Atlantic Council.
Encouragement for Public Sector Involvement
Referring to a 2018 speech by her predecessor, Christine Lagarde, where Lagarde encouraged policymakers to explore the use of CBDCs, Georgieva said that many countries are investigating CBDCs and developing regulations to guide digital money developments. She also mentioned that the IMF recently launched a CBDC handbook as a reference guide for policymakers around the world.
Potential of CBDCs
Georgieva also discussed the potential applications of CBDCs, stating that countries that have issued retail CBDCs include the Bahamas, Jamaica, and Nigeria. She highlighted that the use of CBDCs for cross-border payments could lower the costs of obtaining, storing, and spending foreign currency, depending on their design and regulations.
Additionally, Georgieva mentioned that artificial intelligence (AI) could amplify some of the benefits of CBDCs by providing accurate credit scoring and personalized support. She emphasized the need to protect personal privacy and data security while leveraging AI to improve financial inclusion.
Looking Ahead
Georgieva concluded by stating that it is essential for the public sector to continue preparing for the deployment of CBDCs and related payment platforms in the future. She also emphasized the need for these platforms to be designed to facilitate cross-border payments, including with CBDCs.
In conclusion, while the potential of CBDCs to replace cash is promising, their widespread adoption will take time. Georgieva’s remarks at the Singapore FinTech Festival shed light on both the opportunities and challenges associated with the use of digital currencies on a global scale.
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