International Monetary Fund, or IMF, managing director Kristalina Georgieva said more than half of all central banks in the world are exploring how to launch digital currencies.
Speaking at a virtual conference hosted by Bocconi University on Oct. 5, Georgieva said the IMF was looking at central bank digital currencies, or CBDCs, and digital currencies as a whole from the perspective of macroeconomic stability. She said the technology had given people the opportunity to effect “seamless, and less costly” transfers, and called CBDCs the most reliable form of digital currency given they had “backing of the state” and were generally regulatory compliant.
“We did a survey of our membership, and it was very impressive: 110 countries are at some stage of looking into CBDCs,” said the managing director.
Georgieva added that stablecoins “fill the digital gap in privately issued money,” but labeled Bitcoin (BTC) and other cryptocurrencies as assets rather than money. She highlighted price volatility as one of the main concerns for the latter, and said public trust as well as established legal and regulatory frameworks would be necessary for CBDCs to take off.
Currently, the Bahamas is the only nation with a state-backed digital currency — the Sand Dollar, which the Central Bank of the Bahamas launched in October 2020. The People’s Bank of China has been piloting its own CBDC in different provinces, and completed cross-border tests in collaboration with the central bank of Hong Kong. However, the largest economy in the world, the United States, is still seemingly ambivalent on the matter.
A recent IMF report asked emerging markets and developing economies to “consider the benefits of issuing central bank digital currencies” in an effort to ensure financial stability. The statement follows the fund saying in April it would “step up” monitoring projects in the crypto space including CBDCs, stablecoins, and digital currencies to see how the IMF might be able to “keep pace with policy challenges” around the technology.