The International Monetary Fund released a virtual handbook for central banks to create central bank digital currencies.
The development of central bank digital currencies (CBDC) could potentially replace cash, although widespread adoption will take time, International Monetary Fund (IMF) Director Kristalina Georgieva says.
While appearing at the Singapore FinTech Festival on Nov. 15, the IMF chief championed the benefits of digital currencies, saying that they can bolster “financial inclusion.”
“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,” Ms. Georgieva said in a speech. “CBDCs would offer a safe and low-cost alternative to cash. 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.”
Ms. Georgieva believes artificial intelligence could play an integral role in advancing the advantages of digital currencies, such as offering accurate credit scoring, providing personalized support, and avoiding biases to prevent inequality.
Her remarks came the same day that the IMF published a paper offering “initial guidance” to policymakers on studying, designing, and implementing a CBDC. The paper states that these virtual currencies could improve payment systems if governments “appropriately” create CBDCs.
“Given the complexities and the novelty involved, policymakers need to explore CBDC carefully and systematically,” the paper’s authors said.
Last year, the IMF also published a comprehensive report that cited the “unprecedented” level of international interest in CBDCs. The 2022 IMF report highlighted a Bank for International Settlements survey in 2022 that confirmed that 93 percent of central banks are studying CBDCs, with financial inclusion in emerging and low-income economies as the “key policy objective.”
Across the globe, governments and central banks have started experimenting or researching the digitization of their currencies. So far, nearly a dozen countries have launched CBDCs, and 100 are in the pilot, development, or research phase, according to the Atlantic Council’s CBDC tracker tool.
Despite widespread public opposition, Ms. Georgieva encouraged governments to “keep preparing to deploy CBDCs and related payment platforms in the future.”
By Andrew Moran
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