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    Home » IMF director says No one-size-fits-all model for CBDCs

    IMF director says No one-size-fits-all model for CBDCs

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    By subhasish on February 10, 2022 News
    IMF director says No one-size-fits-all model for CBDCs
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    The International Monetary Fund (IMF) just remarked that there is no universal approach when designing Central Bank Digital Currencies, but countries must focus on financial stability and privacy.

    According to a recent study IMF managing director Kristalina Georgieva said “No one size fits all,” as CBDCs have diverse use cases and should be tailored to a nation’s situation. She went on to add,

    “There is no universal case for CBDCs because each economy is different.”

    IMF director says No one-size-fits-all model for CBDCs

    CBDC- A New Digital Era

    A Central Bank Digital Currency (CBDC), is the digital form of a country’s fiat currency. Instead of printing paper currency or minting coins, the central bank issues electronic tokens. Central banks all across the world are rolling up their sleeves and familiarizing themselves with digital currencies.

    Georgieva said that a CBDC can be an “important path to financial inclusion,” especially for countries whose geographic makeup prevents easy transactions through central banks, while it could also be an “essential backup in the event that other payment instruments fail.” She has also noted that financial stability and privacy considerations are “paramount” when designing CBDCs. She commented,

    “In many countries, privacy concerns are a potential deal breaker when it comes to CBDC legislation and adoption. So, it’s vital that policymakers get the mix right.”

    The Growing Significance Of CBDC

    IMF director says No one-size-fits-all model for CBDCs

    According to the study, roughly 100 countries are now looking at CBDCs, including China, Sweden and the Bahamas where digital money is already up and running or at an advanced stage. If CBDCs were designed “prudently” they could potentially offer more resilience, make it easier for people to have access to bank-type services and lower the cost of moving around money.

    Georgieva added that the digital currencies are a lot safer compared to “unbacked cryptoassets that are inherently volatile”, referring to the likes of Bitcoin as well as more regulated “stablecoins”, which are generally linked to a mainstream currency or something such as gold.

    The former World Bank CEO highlighted the delicate balance of both technical design and policy. While the technology underpinning this new form of money requires time and resources, developing new legal frameworks and regulations are just as crucial.

    The IMF exec concluded by saying that the International Monetary Fund is extending its support to countries in their CBDC experiments—to understand big picture trade-offs, to provide technical assistance, and to serve as a transmission line of learning and best practice.

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    Subhasish Barua is a full-time writer at Blockchain Journal. A post-graduate in Marketing and HR, he joined the cryptocurrency space in 2018 and is an fervent believer of financial freedom.

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