Kristalina Georgieva, a managing director at the International Monetary Fund (IMF), acknowledged the importance of central bank digital currencies (CBDCs) during a discussion at the Milken Institute Global Conference. According to Georgieva, the IMF is increasing its staff working on digital money as the organization can no longer afford to ignore digital versions of fiat currencies.
Georgieva noted that the future of finance was digital even before the pandemic, but the current situation has accelerated its arrival. She explained that about 110 countries are studying CBDCs or preparing for their implementation, and the IMF is engaged in discussions with around 50 of these nations.
The IMF leader differentiated between wholesale CBDCs, designed for specific financial institutions, and retail CBDCs, which individuals can hold and use. Georgieva said that wholesale CBDCs could be implemented with relatively few surprises, while retail CBDCs could completely transform the financial system with unknown consequences.
CBDC developments in various countries
Countries like the Bahamas and China have already launched CBDC projects, with the Central Bank of the Bahamas introducing the Sand Dollar in 2020 and China testing digital yuan pilots across several provinces. Georgieva believes that even the US, which was initially less interested in CBDCs, will see significant transformations as a result of these digital currencies.
In March 2022, President Biden signed an executive order urging the research and development of a US CBDC, although no formal plans have been made for its launch. In July, the Federal Reserve is set to introduce a real-time payments service, FedNow, which some speculate could be a step towards a CBDC. Fed Chair Jerome Powell stated that any digital currency launch would require Congress and government approval.
