Retail central bank digital currencies (CBDCs), according to the managing director of the International Monetary Fund (IMF), would have a wide range of unpredictable “consequences.”
In an interview given on May 1 at the Milken Institute’s 2023 Global Conference, Kristalina Georgieva of the IMF erred on the side of caution while discussing retail CBDCs. Retail CBDCs, according to Georgieva, have a lot more space for mistakes than wholesale CBDCs.
We believe wholesale CBDCs may be implemented with very little room for unfavorable surprises, but retail CBDCs change the financial system with unknown repercussions.
Retail CBDCs are virtual currencies with state support that central banks have released for usage by individuals and companies.
Like retail CBDCs, wholesale CBDCs are also issued by central banks, but they’re intended to let financial firms hold reserve deposits with a central bank. Georgieva said that the IMF is working with roughly 50 nations to make sure best practices are implemented, and she anticipates that this will have a significant impact on banks and economies in the future.
The IMF chief said, “We are engaging with countries; we work with about 50 countries on this very topic.”
“The CBDCs will bring about a very significant transformation,” Since “even” the United States is currently involved in CBDC development, Georgieva concluded that “the future” of CBDCs has already arrived:
Even in the United States, where that issue wasn’t exciting, there is no involvement for the right reasons. The future has come to pass. On April 12, the IMF announced that it would produce a CBDC guidebook to assist central banks in designing and implementing CBDCs. The United Nations’ finance agency said that “unprecedented” amounts of interest from countries throughout the globe led to the decision.