The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, says that crypto assets and stablecoins are no match for well-designed central bank digital currencies (CBDCs). “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, Stablecoins, and CBDCs
IMF Managing Director Kristalina Georgieva gave a speech last week at the Atlantic Council in Washington D.C. regarding the future of money, cryptocurrency, and central bank digital currencies (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.”
Nonetheless, the IMF chief said:
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 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.”
The IMF boss said that around 100 countries are 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. In addition, she recognized that the U.S. Federal Reserve issued a report on CBDCs last month.
The IMF is deeply involved in this issue, including through providing technical assistance to many members. An important role for the Fund is to promote exchange of experience and support the interoperability of CBDCs.
She proceeded to share some of the lessons learned from various central banks from their digital currency efforts.
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:
The history of money is entering a new chapter. Countries are seeking to preserve key aspects of their traditional monetary and financial systems, while experimenting with new digital forms of money.
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