The managing director of the International Monetary Fund (IMF) said that central bank retail digital currencies (CBDCs) will bring with them a host of unforeseeable “consequences”.
The IMF’s Kristalina Georgieva sounded cautious about retail CBDCs in an interview on May 1 at the Milken Institute’s Global Conference 2023.
Georgieva explained that the IMF views retail CBDCs as having much more room for error than wholesale CBDCs.
“We believe that wholesale CBDCs can get off the ground with fairly little room for undesirable surprises, while retail CBDCs completely transform the financial system in ways that we don’t quite know what the consequences might be.”
Retail CBDCs are state-backed virtual currencies issued by central banks for consumer and business use.
Wholesale CBDCs are similarly issued by central banks, but are designed to allow financial institutions to hold reserve deposits with a central bank.
The IMF is working with some 50 countries to ensure the adoption of best practices, Georgieva said, which she hopes will have a huge influence on banks and economies in the future.
My message to the @MilkenInstitute Global Conference: ‘Think about the unthinkable!’ After the pandemic and Russia’s war on Ukraine, we need to be ready for what is impossible to imagine.
Thank you @MyStephanomics for a riveting conversation. #MIGlobal pic.twitter.com/Q2y4A6iKWH
—Kristalina Georgieva (@KGeorgieva) May 1, 2023
“We are committing to the countries, we are working with about 50 countries now on this very issue,” said the IMF executive.
“We will see a very significant transformation coming from CBDCs.”
Georgieva noted that “even” the United States is now participating in the development of CBDCs, which led her to conclude that “the future” of CBDCs is already here:
“Even in the United States, where for quite some time it was a topic without much interest, now there is commitment, and for the right reason. The future has arrived.”
The IMF announced on April 12 that it will publish a manual on CBDCs to assist central banks in their design and implementation. The United Nations financial body said the decision was made after receiving “unprecedented” interest from countries around the world.
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