There is no “one size fits all” for central bank digital currencies, says IMF head

There is no “one size fits all” for central bank digital currencies, says IMF head
FILE PHOTO: The International Monetary Fund logo is seen inside its headquarters at the end of the IMF/World Bank annual meetings in Washington, U.S., October 9, 2016. REUTERS/Yuri Gripas/File Photo

The backstory:

  • As some of you may have heard, many countries, from wealthy ones to poorer ones, are in the middle of trying to develop their own digital currencies.
  • Central Bank Digital Currencies, or CBDCs, are essentially a form of centralized cryptocurrency that is a digital form of regular flat currency.
  • Unlike your typical cryptos, though, such as Bitcoin, CBDCs are run by governments and their central banks, bringing more regulation and less anonymity, which is, ironically, the aspects traditional crypto proponents like.
  • But that aside, CBDCs promise the speed and other benefits of crypto without the associated risks.

The development:

  • On Wednesday, the International Monetary Fund (IMF) published a study, which looked at six nations, including China, Sweden and the Bahamas, where CBDCs are already at an advanced stage. The group also said that around 100 countries are currently looking at CBDCs.
  • When discussing the report during a speech, the IMF Managing Director Kristalina Georgieva said that there were a few takeaways based on the progress made by these countries.
  • She started off by saying that there is “no one size fits all," and that “these are still early days for CBDCs, and we don’t quite know how far and how fast they will go."
  • She also added that if these CBDCs were designed “prudently," they could make it easier for people to access bank-type services and lower the cost of moving money around. She also added that it would be safer than “unbacked cryptoassets that are inherently volatile."

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