IMF says central bank digital currencies can replace cash: ‘This is not the time to turn back’

Key Points

• Potential to Replace Cash: Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), highlighted the potential for Central Bank Digital Currencies (CBDCs) to replace cash, especially in island economies where cash distribution is costly. CBDCs could offer resilience in advanced economies and improve financial inclusion by providing a safe and low-cost alternative to cash.
• Global Interest and Progress: The IMF noted unprecedented global interest in CBDCs, with over 100 countries, approximately 60% of the world, exploring them. Several central banks have launched pilots or issued CBDCs, according to a September report. While 93% of 86 surveyed central banks are exploring CBDCs, as of June, only 11 countries have adopted them, with 53 in advanced planning stages and 46 researching the topic.
• Continued Preparation for Deployment: Georgieva emphasized that countries should continue preparing to deploy CBDCs and related payment platforms, urging the public sector to stay open to potential CBDC deployment in the future. She highlighted the need to design these platforms from the start to facilitate cross-border payments, including with CBDCs. The IMF launched a CBDC handbook as a reference guide for policymakers, emphasizing ongoing investigation and development of regulations for digital money. Additionally, Georgieva noted the potential amplification of CBDC benefits through artificial intelligence, including improved financial inclusion through accurate credit scoring and personalized support.