The International Monetary Fund (IMF) managing director has called for a “ prudently designed” central bank digital currency to rival private forms of crypto-assets and stablecoins.
“If CBDCs are designed responsibly, they can potentially offer more resilience,” Kristalina GeorgievaInterview last week. She acknowledged that although these currencies might be beneficial in some circumstances, there are risks.
Kristalina Georgieva, IMF’s Managing Director, spoke to an audience of Atlantic Council members last week about the future of cryptocurrency and money.
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Central banks are in the experimentation phase with digital currencies, but it’s still early days. We don’t know how far they will go or fast this new technology could take us.
The idea of Central Bank Digital Currency (CBDC) has been gaining momentum lately – not only because of its potential for reduced inflation rates and increased monetary stability across countries; but also due to recent developments within financial sectors around the world, which show strong interest among investors looking ahead at what may come next.
IMF Managing Director Georgieva said;
CBDCs can offer greater resilience, safety and availability if they are carefully designed. They also have lower fees than traditional digital currency. This is evident when compared with unbacked cryptocurrency assets, which are intrinsically 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.
CBDCs Explored Around The World
According to the International Monetary Fund’s head, this money is being explored by around 100 countries. They think people will love using it because there’s no need for third-party intermediaries like banks or credit card companies when you have your own sovereign wealth fund.
A Federal Reserve report was released last month on CBDCs. For example, the Sand Dollar in the Bahamas by Sweden’s Riksbank and e-CNY in China was an early proof of concept. CBDCs is promising because it will lower citizens’ interest rates. It also maintains financial stability by increasing cashless transactions.
Georgieva:
IMF has been involved with this topic, providing technical assistance to numerous members. The Fund plays an important role in promoting exchange of experiences and supporting the interoperability between CBDCs.
IMF Cheif reveals her thoughts
In a speech delivered at the Atlantic Council, she discussed central banks’ digital currency efforts. They provided some valuable lessons for how they can best execute such programs in the future.
Thought pieces by female economists are still rare, but they’re becoming more common than ever before. It is changing rapidly. We need individuals with a wide range of skills as technology evolves. Think critically about emerging technologies such as blockchain and how they might impact our future.
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The IMF’s chief has stressed that there is no universal case for CBDCs. Because every country, each nation needs it differently. According to her, central banks need to tailor their plans for each country’s specific needs. The plan must address privacy issues or concerns about financial stability during the creation phase of this new monetary system. It will also be used to implement it. It is important to strike a balanced approach between privacy and design in the design.
Georgieva said, “In conclusion.”
Money’s history is about to enter a new chapter. The countries want to retain key elements of their existing monetary and financial systems while trying out new digital forms.
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