IMF: Cryptocurrencies cannot compare well-designed CBDCs
International Monetary Fund (IMF) Managing Director Kristalina Georgieva says that crypto assets and stablecoins are nothing like CBDCs – well-designed central bank digital currencies.
IMF Director – Kristalina Georgieva
IMF view on cryptocurrencies, stablecoins and CBDC
IMF Managing Director Kristalina Georgieva gave a speech on the future of currencies, cryptocurrencies and CBDCs at the Atlantic Council in Washington DC last week.
According to Georgieva, central banks have not only discussed the concept in relation to digital currencies, they are also in the testing phase of it. “It’s still early days for CBDCs and we don’t know how far they will go, at what rate of growth,” she noted.
However, the director of the IMF said:
“If carefully designed, CBDCs can offer greater resilience, security, greater availability, and lower costs than private forms of digital currency.
The difference is easy to see when compared to crypto assets which are inherently volatile. And even fairly well-regulated stablecoins may not be suitable for a well-designed and stable CBDC.”
Georgieva says about 100 countries are exploring central bank digital currencies like the Bahamas sand dollar, the Riksbank CBDC proof-of-concept and e-CNY in China. In addition, she also revealed that the US Federal Reserve released a report on CBDC last month.
“The IMF is deeply committed to this, including providing technical assistance to many of its members. The key role of the foundation is to promote the exchange of experiences and support the interoperability of CBDCs.”
She went on to share some lessons she learned from various central banks regarding their digital currency efforts.
First, there is no universal case for CBDCs as every economy is different. Therefore, central banks should adapt their plans to their particular circumstances and needs.
Second, she emphasized, “Financial stability and privacy considerations are paramount when designing CBDCs. In many countries, privacy concerns are a potential factor violating CBDC law and adoption. So it’s important that politicians get it right.”
Third, the IMF director mentioned balanced design and policy developments.
Finally, Georgieva concludes:
“The history of money opens a new chapter. Countries are looking for ways to preserve important aspects of their financial systems and traditional currencies while experimenting with new forms of digital currency.”
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