Kristalina Georgieva is the managing director at International Monetary Fund (IMF). She says that stablecoins and crypto assets are not able to compete against central bank digital currency (CBDC) designs. “If CBDCs are designed prudently, they can potentially offer more resilience, more safety, greater availability, and lower costs than private forms of digital money,” she said.
IMF on Crypto and Stablecoins.
Kristalina Georgieva, IMF’s Managing Director, gave an address last week to the Atlantic Council in Washington D.C. about the future of money and cryptocurrency (CBDCs).
Noting that central banks have moved beyond conceptual discussions regarding digital currencies and are in the experimentation phase, she noted: “These are still early days for CBDCs and we don’t quite know how far and how fast they will go.”
The IMF chief however stated:
CBDCs, if designed with care, can provide greater resilience and safety as well as higher availability and lower cost than other forms of digital money.
She continued: “That is clearly the case when compared to unbacked crypto assets that are inherently volatile. And even the better managed and regulated stablecoins may not be quite a match against a stable and well‑designed central bank digital currency.”
IMF boss stated that about 100 countries were exploring central bank digital currencies.
She mentioned the Sand Dollar in the Bahamas, a proof-of-concept by Sweden’s Riksbank, and the e-CNY in China. Additionally, she acknowledged the fact that the U.S. Federal Reserve had published a report last month on CBDCs.
Georgieva revealed:
This issue is a major concern for the IMF, which provides technical support to many of its members. The Fund plays an important role in promoting exchange of experiences and supporting the interoperability between CBDCs.
She shared with us some lessons that central banks have learned through their efforts to create digital currencies.
Firstly, she said, “There is no universal case for CBDCs because each economy is different … So, central banks should tailor plans to their specific circumstances and needs.”
Secondly, she stressed that “Financial stability and privacy considerations are paramount to the design of CBDCs.” The IMF Chief noted, “In many countries, privacy concerns are a potential deal-breaker when it comes to CBDC legislation and adoption. So it’s vital that policymakers get the mix right.”
Thirdly, she stressed the “balance between developments on the design front and on the policy front.”
In conclusion, Georgieva said:
A new chapter is being written in the history of money. The countries want to retain key elements of their existing monetary and financial systems while trying out new digital forms.
What do you think about the IMF managing director’s comments? Please leave your comments below.
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