CBDCs can replace cash, says IMF chief

Kristalina Georgieva – Credit: Shutterstock

For Kristalina Georgieva from FMIthe central bank digital currencies have the potential to replace the species. Several countries have begun to issue this type of currencies.

During the Singapore FinTech Festival 2023the head of the International Monetary Fund, Kristalina Georgievasaid that central bank digital currencies could eventually replace cash, pointed out CNBC this Wednesday.

CBDCs can replace cash that is expensive to distribute in island economies. They can offer resilience in more advanced economies. And they can improve financial inclusion where few people have bank accounts,” she said.

Abstract CBDC in English or MNBC a central bank digital currency is a tokenized version of a fiat currency such as the euro or the dollar.

CBDCs offer a safe, low-cost alternative [au cash]. They would also provide a bridge between private funds and a yardstick for measuring their value, just like the cash we can withdraw from our banks today,” she added.

According to the IMF, which is preparing an infrastructure to ensure the interoperability of the various CBDCs worldwide, more than 100 countries are currently exploring the possibilities offered by these new currencies.

The Bank for International Settlements reported this summer that the majority of central bankers (93%) were “engaged in some form of work” around CBDCs. According to the BIS, there could be 15 retail CBDCs and 9 wholesale CBDCs in circulation by 2030.

The level of global interest in CBDCs is unprecedented. Several central banks have already launched pilot projects or even issued a CBDC,” said Georgieva.

A number of countries, including China and Nigeria, have already begun issuing CBDCs. In Europe, the central bank recently announced that it was entering the preparation phase for the digital euro. “We must prepare our currency for the future”, declared its president Christine Lagarde.

The head of the IMF also said that artificial intelligence could “amplify some of the benefits of CBDCs” by providing accurate credit ratings, for example.

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