SINGAPORE — The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, stated on Wednesday at the Singapore FinTech Festival that central bank digital currencies (CBDCs) have the potential to replace cash, emphasizing their benefits in reducing distribution costs, enhancing resilience in advanced economies, and improving financial inclusion.
Georgieva highlighted that CBDCs, as the digital counterparts of a country’s fiat currency, regulated by the central bank and utilizing blockchain technology, could offer a secure and low-cost alternative to physical cash. She noted their potential to serve as a bridge between private currencies and act as a standard measure of their value.
The IMF chief disclosed that over 100 countries, representing approximately 60% of nations globally, are exploring CBDCs. Several central banks have initiated pilots or issued CBDCs, showcasing an unprecedented global interest in this digital financial innovation, as stated in an IMF report from September.
A survey conducted by the Bank for International Settlements in 2022 revealed that 93% of the 86 central banks surveyed were exploring CBDCs, with 58% expressing intentions to issue a retail CBDC in the short or medium term.
Georgieva acknowledged the slow adoption, with only 11 countries having adopted CBDCs as of June, while 53 are in advanced planning stages, and 46 are in the research phase, according to data from the Atlantic Council.
In response to the evolving landscape, the IMF released a CBDC handbook on Wednesday, serving as a reference guide for policymakers globally. Georgieva encouraged countries to remain open to deploying CBDCs in the future, emphasizing that “this is not the time to turn back.”
She urged the public sector to continue preparations for CBDC deployment, ensuring these platforms are designed to facilitate cross-border payments. Georgieva also emphasized the potential benefits of artificial intelligence (AI) in conjunction with CBDCs, foreseeing improved financial inclusion through accurate credit scoring and personalized support.
Countries such as the Bahamas, Jamaica, and Nigeria have already issued retail CBDCs, with Singapore’s Monetary Authority highlighting that cash is becoming incompatible with the digital economy. Georgieva concluded by emphasizing the need to protect personal privacy and data security while harnessing AI’s benefits responsibly.
