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Kristalina Georgieva, Managing Director of the International Monetary Fund, has voiced her support for the adoption of Central Bank Digital Currencies (CBDCs) during the Singapore FinTech Festival. Georgieva pointed out that CBDCs have the potential to replace cash, especially in island economies where the distribution of physical currency is costly. Additionally, CBDCs can enhance financial resilience in more advanced economies and improve financial inclusion by providing access to digital currency for those without bank accounts. CBDCs represent the digital form of a country’s fiat currency, regulated by the central bank and powered by blockchain technology. One significant advantage of CBDCs is their potential to offer a safe and low-cost alternative to physical cash. They can serve as a bridge between private cryptocurrencies and traditional fiat currencies, providing a reliable yardstick for measuring their value. Global interest in CBDCs soars The IMF reports that over 100 countries, representing approximately 60% of the world’s nations, are currently exploring the possibilities of CBDCs. Several central banks have already initiated pilot programs or issued their own CBDCs. A survey conducted by the Bank for International Settlements in 2022 revealed that 93% of 86 central banks surveyed were exploring CBDCs, and 58% indicated their intention to issue a retail CBDC in the short or medium term. Despite the growing interest, as of June, only 11 countries have adopted CBDCs, with 53 more in advanced planning stages and 46 conducting research on the topic. This slow pace of adoption underscores the complexity and potential challenges associated with transitioning to digital currencies. Kristalina Georgieva referenced her predecessor Christine Lagarde’s 2018 speech encouraging policymakers to explore the use of CBDCs. Georgieva emphasized that countries are now actively investigating CBDCs and developing the necessary regulatory frameworks. She urged nations to remain open to deploying CBDCs, even if the current…

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Filed under: News - @ November 15, 2023 11:16 pm