World

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The IMF believes that central bank digital currencies (CBDCs) have the potential to eventually supplant cash in the monetary system of the world, according to the watchdog’s managing director Kristalina Georgieva. 
Georgieva made the statement during a <a href="https://www.imf.org/en/News/Articles/2023/11/15/sp-111423-the-digital-finance-voyage-a-case-for-public-sector-involvement">keynote address</a> at the Singapore Fintech Festival on Nov. 15. Her speech highlighted the progress and challenges in the adoption of CBDCs and the importance of cross-border payment platforms. 
According to the director: 
<blockquote>
 “CBDCs can replace cash which is costly to distribute in island economies. They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts.”
</blockquote> 
<h2 id="cbdc-adoption">CBDC Adoption</h2> 
Georgieva said that global interest in CBDCs is on the rise, with approximately 60% of countries exploring these digital currencies. She added that CBDCs bring myriad benefits to the monetary system, including cost-effective cash replacement, enhanced financial resilience, and improved financial inclusion, particularly in economies where traditional banking services are limited. 
Despite the promising developments, Georgieva stressed that the adoption of CBDCs is still in its early stages, acknowledging that there might be potential challenges and criticisms. She encouraged countries to remain open to deploying CBDCs in the future, emphasizing the need for the public sector to continue preparations for their potential implementation. 
Her keynote emphasized the role of CBDCs in facilitating cross-border payments, a process currently marred by slow speeds, high costs, and limited availability. She said the IMF and the World Bank plan to publish a common plan to provide capacity development for countries aiming to enhance cross-border payment efficiency. 
Additionally, she highlighted the potential amplification of CBDC benefits through advancements in artificial intelligence (AI). She said that if AI is managed prudently, it could contribute to rapid, accurate credit scoring and personalized support for individuals with low financial literacy. 
Georgieva emphasized the need to prioritize personal privacy, data security, and the avoidance of embedded biases to ensure the responsible use of AI. 
<h2 id="public-private-collaboration">Public-private collaboration</h2> 
Georgieva acknowledged the multitude of players exploring cross-border platforms and stressed the importance of public sector guidance without crowding out private initiatives. 
She suggested establishing desirable properties of cross-border platforms from a policy standpoint, including the management of capital flows and common rules for combating money laundering and data protection. 
Georgieva said that the private sector will play a crucial role in the success of CBDCs and called on fintech leaders and developers to contribute to the onboarding of merchants for CBDC acceptance. She also urged the development of technology to allow seamless integration of CBDCs into financial services and messaging apps. 
According to the IMF director, communication strategies and incentives will be essential in driving distribution, adoption, and integration. 
Georgieva concluded by highlighting the ongoing collaboration required across international institutions, central banks, and ministries of finance. She affirmed the IMF’s commitment to playing its part in shaping the global digital financial landscape to ensure it is more inclusive than traditional systems. 
The post <a href="https://cryptoslate.com/imf-managing-director-says-cbdcs-can-replace-cash-but-urges-public-and-private-sector-cooperation/">IMF managing director says CBDCs can replace cash, but urges public and private sector cooperation</a> appeared first on <a href="https://cryptoslate.com">CryptoSlate</a>.

IMF managing director says CBDCs can replace cash, but urges public and private sector cooperation

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