Kristalina Georgieva, Managing Director of the IMF, expressed that the public sector should continue getting ready to utilize central bank digital currencies and related payment systems in the future. "We still haven't reached a destination. There is a big deal of potential for invention and a lot of uncertainty concerning possible applications," she said during the Singapore FinTech Festival 2023 on Wednesday. According to data from the Atlantic Council, as of June 2023, only 11 nations have adopted CBDCs.
Kristalina Georgieva, managing director of the International Monetary Fund, suggested on Wednesday at the Singapore FinTech Festival that central bank digital currencies (CBDCs) are capable of replacing cash, although it could take a while for them to become widely adopted. Georgieva noted that CBDCs can be useful in island economies, those in more advanced economies, and those where few have bank accounts. CBDCs are digitized versions of a country's fiat currency, which are regulated by the country's central bank and are enabled by blockchain technology, enabling governments to make direct payments to citizens. She explained that CBDCs "would offer a safe and low- cost alternative [to cash], they would also offer a bridge to go between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks." The IMF has estimated that more than 100 countries are investigating CBDCs, with more than half considering a retail CBDC either in the short or medium term. As of yet, only 11 countries have implemented CBDCs, while 53 are in advanced stages of planning and 46 are researching the topic.
Referring to a 2018 speech by her predecessor Christine Lagarde, when the former IMF chief urged policymakers to heed the "winds of change" and consider the use of CBDCs, Georgieva said: "Five years on, I'm here to give you an update on that journey.""To start, nations have embarked on this voyage. Numerous are studying CBDCs and forming regulations to regulate digital money advancements," said Georgieva in reference to the speech.On Wednesday, the fund issued a CBDC handbook as a reference manual for policymakers across the world. Georgieva stated that numerous countries are analyzing CBDCs and creating regulations to oversee digital money advances."Secondly, we have yet to reach our destination. There is much potential for invention and much doubt around use-cases," Georgieva told an audience that included industry experts, investors and journalists."In some countries the prospect may not seem promising at present, but even then they should remain open to potentially deploy CBDCs in the future. Why?" asked Georgieva. "This is not the time to turn back.""The public sector should keep installing CBDCs and connected payment systems for the future. Fourth, these systems ought to be devised from the beginning to expedite cross-border payments, including with CBDCs," the managing director stated.
The Bahamas, Jamaica and Nigeria have all introduced digital currencies for retail purposes. Singapore's central bank has declared that cash is not suitable for the digital age, and in a report from 2021 said the use of cash as a payment option will continue to decrease. The Bank for International Settlements (BIS) has suggested that central bank digital currencies (CBDCs) for border payments may reduce the expense of receiving, storing and spending foreign currency, subject to its design and regulations. Additionally, International Monetary Fund (IMF) Managing Director Kristalina Georgieva has pointed out that artificial intelligence could strengthen the advantages of CBDCs by providing precise credit scores and tailored assistance.
The introduction of OpenAI's ChatGPT in November last year has generated a huge surge in demand for generative AI. Reports estimate that it was able to amass 100 million monthly active users within a couple of months of its launch. Georgieva commented, "It has the potential to facilitate financial inclusion by delivering swift and accurate credit scores based on various sources of data. In addition, it could provide personalized guidance to individuals with limited financial know-how." She went on to say, "We need to ensure that personal privacy and data security remain intact, and that any biases aren't perpetuated – but instead try to reduce them. If managed correctly, AI could be an incredible help."
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