IMF Managing Director Encourages Policymakers to Embrace CBDCs

According to Blockworks, International Monetary Fund's managing director Kristalina Georgieva emphasized the benefits of central bank digital currencies (CBDCs) in a speech at the Singapore Fintech Festival on Wednesday. She urged policymakers to continue introducing and potentially embracing CBDCs, echoing a similar speech made by her predecessor, Christine Lagarde, five years ago. Georgieva stated that the public sector should keep preparing to deploy CBDCs and related payment platforms in the future, as the world continues to advance rapidly with new technologies. Georgieva highlighted that countries should remain open to potentially deploying CBDCs in the future. Several countries, including the US, are currently exploring the possibility of implementing a CBDC. However, many believe that it will take some time before central banks decide to move forward with this initiative. In August, Canada's central bank acknowledged that significant barriers remain before it can implement a CBDC. A Bank of International Settlements survey in July found that 94% of banks surveyed expressed interest in exploring CBDCs. Georgieva noted that CBDCs can replace cash, which is costly to distribute in island economies, offer resilience in more advanced economies, and improve financial inclusion where few hold bank accounts. She mentioned that 60% of countries are exploring a CBDC and encouraged central banks interested in CBDCs to think more like entrepreneurs, emphasizing the importance of communication strategies and incentives for distribution, integration, and adoption. One of the most crucial factors when exploring a CBDC is its ability to facilitate cross-border payments. The IMF also announced a CBDC handbook, outlining different steps to start exploring a CBDC.