Central bank digital currencies (CBDC) have the potential to replace cash, but adoption could take time, said Kristalina Georgieva, Managing Director of the International Monetary Fund at the Singapore FinTech Festival on November 15.
CBDCs can replace cash which is costly to distribute in island economies, offer resilience in more advanced economies, and improve financial inclusion where few hold bank accounts, said the IMF chief, urging the countries to make a more proactive push to develop these currencies.
In her speech in Singapore, Georgieva said that 11 countries, including a number in the Caribbean, and Nigeria, have already launched CBDCs. Around 120 other countries are exploring them, although progress and approaches differ widely and a few have even abandoned the idea altogether.
Georgieva made her remarks as the IMF published the first instalment of a “virtual handbook” on CBDCs, which has been designed to help countries with the design and set-up process and ensure that the new technologies are globally interoperable.
CBDCs are the digital form of a country’s fiat currency, which are regulated by its central bank. These currencies are powered by blockchain technology, allowing central banks to channel government payments directly to households.