The IMF ratifies its support for CBDCs and they already appear as an alternative to replace cash

“CBDCs can replace cash, which is expensive to distribute in island economies. They can offer resilience in more advanced economies. And can improve financial inclusion where few have bank accounts“, he explained at the FinTech Festival held in Singapore, where he presented a reference guide for countries that are developing these digital currencies.

Likewise, the managing director of the International Monetary Fund stressed that the public sector “must continue preparing to deploy CBDC and related payment platforms in the future“These platforms must be designed from the beginning to facilitate cross-border payments, including CBDC payments,” he said.

Georgieva also stated that the artificial intelligence “could amplify some of the benefits of CBDCs” by providing accurate credit scoring and personalized assistance. “We certainly need to protect personal privacy and data security, and avoid implicit bias so as not to perpetuate inequality, but rather to try to reduce it. Prudently managed, AI could help,” he added.

Georgieva also echoed recent comments from BIS Head Agustín Carstens that CBDCs will be critical to the financial innovation and that the private sector will have to play an important role in bringing the currencies to the market.

What are CBDCs

CBDCs are digital iterations of sovereign currencies like the American dollar or the euro issued by the central banks. They use the blockchain technology, which makes them similar to cryptocurrencies. Governments around the world believe that these currencies could contribute to the digitalization of payments, improve the efficiency of cross-border payments and help financial inclusion, bringing financial services to the unbanked or underbanked populations.

According to the IMF, more than 100 countries are studying the possibility of creating CBDCwhich is equivalent to approximately 60% of the world’s countries, an “unprecedented interest” as Georgieva has described it.

Although one survey conducted in 2022 for him Bank for International Settlements (BIS), Of the 86 central banks surveyed, 93% stated that they were studying the possibility of issuing CBDC, while 58% said they were likely or likely to issue a retail CBDC in the short or medium term. Despite this, only 11 countries had issued a CBDC (Jamaica, Nigeria, Bahamas…), with another 53 in advanced planning stages and another 46 investigating it, according to data from the Atlantic Council.