IMF Calls For “Exploration” Of Central Bank Digital Currency
Christine Lagarde believes that the “exploration” of a central bank digital currency (CBDC) should be encouraged, since the demand for cash is decreasing and usage of digital money is increasing.
Canada, China, Sweden and Uruguay are among the countries where central banks are seriously considering the issuance of CBDCs. According to Lagarde, their example should be followed: “I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”
On the other hand, the IMF doesn’t consider “public” cryptocurrencies to be an alternative to CBDCs. In a report titled “Casting Light on Central Bank Digital Currency”, the organization stated: “cryptocurrencies are different along many dimensions and struggle to fully satisfy the functions of money, in part because of erratic valuations.”
All in all, the IMF’s approach to digital currencies is cautious. While crypto offers “great promise” for financial inclusion and privacy in payments, there are also risks to financial stability. Therefore the IMF is currently calling for further “exploration” of possibilities and threats related to the use of digital money.