Among the members of the International Monetary Fund (IMF), 110 countries examine the central bank’s digital currencies (CBDCs), revealed the fund’s president and CEO Kristalina Georgieva at an event hosted by Bocconi University in Italy. Speaking externally to the public, she noted that the key challenge for monetary authorities now is to guarantee the interoperability of these currencies.
According to Georgieva, a major consideration is whether state-sponsored digital currencies can serve as a means of exchange that the public trusts, Reuters reported on Tuesday. Other questions that politicians need to answer are whether CBDCs can contribute to domestic economic stability and how they would fit within the international regulatory framework introduced by organizations such as the Bank for International Settlements (BIS).
The BIS Innovation Hub is leading several projects to test the use of government-issued digital currencies in international transactions, such as a collaboration between the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank. These also include joint trials conducted by China, Hong Kong, Thailand and the UAE as well as a wholesale CBDC test conducted by the Banque de France and the Swiss National Bank.
Referring to cooperation between international financial organizations and national monetary authorities concerning CBDCs, Kristalina Georgieva further stated:
“It is very impressive how much the international community, central banks, institutions like ours are now actively involved in ensuring that money in this fast-paced world of digitalisation is a source of confidence and helps the economy to function rather than [being] a risk “.
The head of the IMF stressed that she considers digital currencies issued by central banks as the most reliable form of digital money, while noting that she has difficulty thinking of cryptocurrencies as money. “De facto assets” such as bitcoin are not supported by assets that keep their value stable and can rise and fall sharply, Georgieva elaborated and insisted:
p style = “box-sizing: border-box; margin-bottom: 1rem; margin-top: 0px;”> “In the history of money, it’s hard to think of them as money”.
In his speech at the Italian academic event, the IMF chief also spoke about Europe’s efforts to address the challenges posed by the proliferation of Covid-19. Kristalina Georgieva noted that the old continent is now more prepared to avoid another debt crisis like the one with Greece after the last global financial crisis. However, she stressed that governments need to plan their course carefully when switching to fiscal consolidation in the medium term so that they can erase the debt burden associated with the pandemic.