Kristalina Georgieva, managing director of the International Monetary Fund has said that a majority of central banks are exploring digital currencies.
Georgieva disclosed the IMF is studying central bank digital currencies, or CBDCs, and digital currencies as a whole from the perspective of macroeconomic stability at a virtual conference hosted by Bocconi University on Oct. 5.
With the new technology, transfers are expected to be “seamless and cheaper,” and CBDCs have the state’s backing and are generally regarded as the most trusted form of digital currency.
“We did a survey of our membership, and 110 countries are looking into CBDCs at some stage,” said the managing director.
Adding that stablecoins will “fill the digital gap in privately issued money,” Georgiaeva emphasized that Bitcoin (BTC) and other cryptos are assets, rather than money.
For CBDCs to succeed, she said price volatility is a major concern, and public trust, as well as legal and regulatory frameworks are important.
There is currently only one national digital currency backed by the government, the Sand Dollar, which the Central Bank of the Bahamas introduced about a year ago.
In collaboration with the central bank of Hong Kong, the People’s Bank of China conducted cross-border tests of its own CBDC in different provinces. Still, the United States, the world’s largest economy, can be described as ambivalent.
According to a recent IMF report, issuance of central bank digital currencies could facilitate financial stability in emerging markets and developing economies.
According to the fund, in April it promised to “strengthen” its oversight of crypto projects, including stablecoins, CBDCs, and digital currencies, in order to keep up with “policy challenges’ relating to such technology.