CBDCs are dependable, stable: IMF

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More than half of the world’s central banks are looking to create their own digital currency CBDCs,(Central Bank Digital Currencies) IMF managing director Kristalina Georgieva has stated at the organisation’s annual meeting. According to a report in the Time of India, Georgieva claimed 110 nations were “in some stage” of considering a CBDC. This represents a little more than half of the IMF’s total number of dealings with central banks.

“Before the pandemic, remember we used to say, the future is digital. With the pandemic, the future has arrived and very prominently in the world of money,” Georgieva said.

She reminded the audience of the much-discussed digital future that has arrived in the shape of digital money with the Covid-19 pandemic.

Central bank digital currencies

Georgieva discussed the opportunities that have arisen as a result of the digital revolution. CBDCs are the most dependable and stable, according to her, because they are backed by the government and integrated into monetary policy. Cryptocurrencies, she claims, are too volatile to be termed money.

To comprehend and avoid the risks and benefits of digital money, Georgieva believes that three components namely CBDCs, stablecoins, and virtual currencies must be differentiated rather than merged. Georgieva identified two major risks: public trust and internal stability, both of which may be ensured by enacting laws and regulations.

Digital Infrastructure

To reap the benefits of the global economy, digital infrastructure must be expanded, and people must be taught about recent advancements. She emphasised the importance of open and efficient tax systems, as well as a worldwide corporate minimum tax, in raising income for transformative initiatives.

She also discussed the fast rate at which CBDCs are being tested and released around the world. In 2019, the Bahamas was the first to launch its CBDC, the Bahamian sand dollar, and China is racing ahead of the pack by putting its digital yuan to the test. India is also considering releasing CBDCs.