Among the members of the International Monetary Fund (IMF), 110 countries are exploring central bank digital currencies (CBDC), revealed the fund’s president and managing director, Kristalina Georgieva, at an event organized by Bocconi University in Italy. Speaking remotely to the audience, he noted that the key challenge for monetary authorities now is to ensure the interoperability of these currencies.
According to Georgieva, an important consideration is whether state-backed digital currencies can serve as a medium of exchange trusted by the public, Reuters reported on Tuesday. Other questions that policymakers must answer are whether CBDCs can contribute to national economic stability and how they would fit within the international regulatory frameworks introduced by organizations such as the Bank for International Settlements (BIS).
The BIS Innovation Hub is leading several projects to test the use of state-issued digital currencies in international transactions, such as a collaboration between the Reserve Bank of Australia, the Negara Bank of Malaysia, the Monetary Authority of Singapore and the Bank of the South African Reserve. These also include joint trials conducted by China, Hong Kong, Thailand, and the United Arab Emirates, as well as a wholesale CBDC trial conducted by the Banque de France and the Swiss National Bank.
Referring to the cooperation between international financial organizations and national monetary authorities regarding CBDCs, Kristalina Georgieva further stated:
“It is very impressive how much the international community, central banks, and institutions like ours are now actively engaged in making sure that in this fast-moving world of digitization, money is a trusted source and helps the economy run instead. from [being] a risk”.
The IMF director emphasized that she sees digital currencies issued by central banks as the most reliable form of digital money, while also commenting that she finds it difficult to think of cryptocurrencies as money. “De facto assets” like bitcoin are not backed by assets that hold their value stable and can go up and down dramatically, Georgieva explained, insisting:
p style = “box-sizing: border-box; margin-bottom: 1rem; margin-top: 0px;”> “In the history of money, it’s hard to think of them as money.”
In her speech at the Italian academic event, the head of the IMF also spoke about Europe’s efforts to deal with the challenges caused by the spread of Covid-19. Kristalina Georgieva pointed out that the Old Continent is now more prepared to avoid another debt crisis like that of Greece after the last global financial crisis. However, he stressed that governments must plan their course carefully as they move towards fiscal consolidation in the medium term in order to eliminate the debt burden related to the pandemic.