The managing director of the International Monetary Fund has claimed that a retail central bank digital currency (CBDC) could have myriad unforeseen “consequences.”
The International Monetary Fund's Kristalina Georgieva was cautious about retail CBDCs in an interview at the Milken Institute's 2023 Global Conference on May 1. Georgieva explained that the IMF believes that retail CBDCs have more room for error than wholesale CBDCs. “We think wholesale CBDC can be implemented in a fairly small space, whereas retail CBDC revolutionizes the financial system in a way that we don't quite know what consequences it will have."
A retail CBDC is a state-backed virtual currency issued by a central bank for use by consumers and businesses. Wholesale CBDCs are similarly issued by central banks, but are designed to allow financial institutions to make reserve deposits with the central bank.
Georgieva said the IMF is working with about 50 countries to ensure best practices are used, which she expects will have a huge impact on banks and economies going forward. “We are engaging with countries, we are now working with about 50 countries on this top ic ,” the IMF executive said.
"We're going to see a very significant shift from CBDC." Georgieva noted that “even” the US is now involved in CBDC development, leading her to conclude that the “future” of CBDCs is here: “Even in the US, it was a topic of low interest for a long time, but now there is engagement, and for the right reasons. The future is already here."
The IMF announced on April 12 that it will publish a CBDC handbook to help central banks with CBDC design and implementation. The UN financial agency said the decision was taken amid an "unprecedented" level of interest from countries around the world.
