SINGAPORE - The International Monetary Fund (IMF) has thrown its weight behind Central Bank Digital Currencies (CBDCs), with Managing Director Kristalina Georgieva highlighting their potential to enhance financial inclusion and fintech development. Speaking at a Singapore event, Georgieva underscored that while current adoption levels are low, more than half of the countries worldwide are exploring the feasibility of CBDCs.
Georgieva pointed out that CBDCs could address the costly distribution challenges of cash, especially in island nations, and improve financial resilience in mature economies. They also promise to expand access in regions where traditional banking services are limited. The IMF chief emphasized that countries should prepare for future CBDC deployment to counteract emerging private digital currencies like Libra.
In her address, Georgieva called for entrepreneurial thinking among country leaders, effective communication strategies, and incentives to encourage the adoption of CBDCs. This approach would ensure their seamless integration into current financial systems and drive growth in the fintech sector, necessitating active engagement from the private sector.
At the Singapore Fintech Festival, Georgieva urged continued systematic exploration of CBDCs by countries. She noted that over 100 countries are researching their readiness for implementing such digital currencies. With active CBDCs in The Bahamas, Jamaica, and Nigeria and significant development efforts underway in Brazil, China, euro area nations, India, and the UK, CBDCs are gaining global traction.
The IMF has developed a Virtual Handbook to navigate policymakers through the evolving CBDC landscape using a '5P methodology'—ranging from preparation to production—and plans to keep it updated with new global insights. This resource explores the monetary policy implications of CBDCs and how they can simplify capital flow management and promote financial inclusion.
As central banks consider new technologies for implementing CBDCs, the IMF continues to offer its support. The organization is planning further publications in collaboration with international entities such as the Group of Twenty to broaden its guidance on CBDCs in the upcoming year.
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