IMF: Central Bank Digital Currencies could Replace Cash

Central bank digital currencies (CBDCs) have the potential to replace cash, but adoption may take time, said Kristalina Georgieva, managing director of the International Monetary Fund.

"CBDCs can replace money that is expensive to circulate in island economies," she said Wednesday at the Singapore FinTech Festival event, CNBC reported.

"They can offer resilience in more advanced economies. And they can improve financial inclusion where few have bank accounts," she added.

CBDCs are the digital form of a country's fiat currency that is regulated by the country's central bank. They are used through blockchain technology, allowing central banks to direct government payments directly to households.

"CBDCs would offer a safe and cheap alternative to cash. They would also offer a bridge between private money and a yardstick to measure its value, just like cash today that we can withdraw from our banks," the IMF chief also said.

According to the IMF, more than 100 countries are exploring the possibility of CBDCs - or roughly 60% of the world's countries.

"The level of global interest in CBDC is unprecedented. Several central banks have already launched pilot projects or even put CBDC into circulation," the IMF said in a September report.

According to a 2022 survey conducted by the Bank for International Settlements (BIS), of the 86 central banks surveyed, 93% said they were exploring the possibility of CBDCs, while 58% said they were likely to launch their own CBDCs in the short or medium term. But as of June, only 11 countries had adopted a CBDC, with another 53 in advanced stages of planning and 46 exploring the issue, according to Atlantic Council data.

According to BIS, the use...