Retail CBDCs bring unknown 'consequences' to financial system: IMF director
A myriad of unforeseeable “consequences” will be brought about by retail central bank digital currencies (CBDCs), the managing director of the International Monetary Fund (IMF) claimed.
The IMF's Kristalina Georgieva erred on the side of caution regarding retail CBDCs in a May 1 interview at the Milken Institute’s 2023 Global Conference.
Georgieva explained the IMF considers retail CBDCs to have far more room for error than wholesale CBDCs.
Retail CBDCs are state-backed virtual currencies issued by central banks for use by consumers and businesses.
Wholesale CBDCs are similarly central bank-issued but are designed to allow financial institutions to carry reserve deposits with a central bank.
The IMF is collaborating with about 50 countries to ensure best practices are adopted, Georgieva said, which she expects to have a huge influence on the 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
“We are engaging with countries, we work with some 50 countries now on this very topic,” the IMF executive said.
Related: IMF examines CBDC design in context of Islamic banking, finds some risks magnified
Georgieva noted that “even” the United States is engaging in CBDC development now, which led her to conclude that “the future” of CBDCs is now here:
The IMF announced on April 12 that it will publish a CBDC handbook to help central banks with CBDC design and implementation. The financial agency of the United Nations said the decision came following “unprecedented” levels of
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