IMF chief warns of ‘negative consequences’ of retail CBDCs

The launch of retail central bank digital currencies (CBDCs) will lead to “many unforeseen consequences,” said Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF).

Wholesale CBDCs are less prone to errors, Georgieva explained.

• wholesale CBDCs are digital currencies of the Central Bank issued for use by financial institutions to hold deposits;

• retail CBDCs are a similar technology aimed at consumers and small and medium-sized businesses.

According to the statement, the IMF is working with about 50 countries to “ensure the implementation of best practices” that the agency expects will have a huge impact on banks and economies.

“Even in the USA, where [CBDC] did not attract much attention, now they are showing interest in technology, and for good reason. The future has come,” said Georgieva.

Recall that in February, the IMF advocated the regulation of digital assets instead of their ban. However, the department did not rule out possible restrictions in the event of higher risks to financial stability.

In March, the IMF warned of the negative impact of cryptocurrencies on financial institutions. The fund believes that the proliferation of digital assets could lead to banks losing deposits and reducing lending.

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The launch of retail central bank digital currencies (CBDCs) will lead to “many unforeseen consequences,” said Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF).

Wholesale CBDCs are less prone to errors, Georgieva explained.

• wholesale CBDCs are digital currencies of the Central Bank issued for use by financial institutions to hold deposits;

• retail CBDCs are a similar technology aimed at consumers and small and medium-sized businesses.

According to the statement, the IMF is working with about 50 countries to “ensure the implementation of best practices” that the agency expects will have a huge impact on banks and economies.

“Even in the USA, where [CBDC] did not attract much attention, now they are showing interest in technology, and for good reason. The future has come,” said Georgieva.

Recall that in February, the IMF advocated the regulation of digital assets instead of their ban. However, the department did not rule out possible restrictions in the event of higher risks to financial stability.

In March, the IMF warned of the negative impact of cryptocurrencies on financial institutions. The fund believes that the proliferation of digital assets could lead to banks losing deposits and reducing lending.

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