Sunday, May 19, 2024

Central bank digital currencies can replace cash, show resilience: Claims IMF chief.

Kristalina Georgieva, the Managing Director of the International Monetary Fund, stated in a lecture on Wednesday that central bank digital currencies (CBDC) can take the role of physical money, particularly in nations where the use of cash is expensive.

Central banks issue digital versions of sovereign currencies, such as the US dollar or the euro, known as CBDCs. These versions may make use of the same technologies as cryptocurrencies. Global governments view these currencies as having the potential to facilitate payment digitization, enhance cross-border payment efficiency, and promote financial inclusion by providing financial services to underbanked or unbanked populations.

Although other organizations, such as the European Central Bank (ECB), have maintained that a CBDC will not displace cash, Georgieva’s remarks suggest it might be an option—and possibly advantageous—for certain economies.

Cash, which is expensive to dispense in island economies, can be replaced with CBDCs. In economies that are more developed, they can provide resilience. Additionally, in areas where few people have bank accounts, they can enhance financial inclusion,” she stated on Wednesday at the Singapore FinTech Festival.

Although there is “so much uncertainty” around CBDC applications and limited acceptance, Georgieva noted that there is room for innovation and that “now is not the time to turn back.”

She continued, saying that the public sector should continue getting ready to implement CBDCs and related payment platforms in the future. These platforms should be made with the intention of facilitating cross-border payments, which are now “expensive, slow, and available to few.”

Major jurisdictions have yet to decide whether to issue CBDCs, despite calls from financial institutions such as the Bank for International Settlements (BIS) for countries to enact the necessary laws.

Georgieva also repeated previous remarks made by BIS Chief Agustin Carstens, who stated that the private sector would need to be heavily involved in bringing the currencies to market and that CBDCs would be essential to financial innovation.

“National policymakers that want to implement CBDCs might have to adopt a more entrepreneurial mindset. Just as crucial as design concerns are communication methods and incentives for distribution, integration, and adoption, according to Georgieva.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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