IMF Georgieva.- Three points to take into account for digital currencies acting as economic booster rather than as an economic risk

Surrounded by the spread of bitcoinlike digital money, plans of several governments and the European Union to launch central bank digital currencies, other tokenized digital “money” experiences and bitcoin and ethereum under upside and downside pressures with their values turning up and down week by week, IMF Managing Director, Kristalina Georgieva, made clear at the G7 rising curtain event held yesterday at Universitá Boccoli (Italy) more than or two points on IMF approach to this tech reality that can boost but also put at risk globl economy.

“Before the pandemic we used to say ‘future is digital’ . With the pandemics the future has arrived., and very prominently in the world of money. So let me first talk about the opportunities that this presents. We are now in a position to fairly quicly accelerate transfers of money to make it sameless and less costly. But to do so, we have to become clear about what do we mena by digital money first”, Georgieva said.

Over 101 countries currently on course to launch CBDCs, but nothing to do with Bitcoin

And she continued: “When we look at this universe, the most reliable is sand bank digital currencies, because we have the backing of the State and they are integrated into the monetary policy. Thinking of the State setting bank digital currencies are still a novelty. In fact there’s only one in existance in this point, the Bahamas issued their Sand digital dollar, the first country to issue a sand digital currency, but they are going to be quite prominent. We did a survey of our membership and it was very impressive, 110 countries are in some stage of looking into CBDCs due to set central bank digital currencies. So that is going to be moving quite rapidly at a force that represents on its own.

A very important question, how do we guarantee interoperativity at central bank digital currencies, how we make sure that they coordinate globally the impact that they may have on monetary policy.”

Three different “e-money” tipes that need for different regulation

“The second component on digital money is stable coins and e-money,” IMF Managing Director explained. ” They are privately issued, but they are convertible in national currency one to one: M-pesa in Kenya or USD in the United States, they have backing in assets, they are liquid and that says that a due field of digital are jabbed in privately issued money.

“Then comes the third category, money that is actually called money but it’s in fact no assets, like Bitocins. They are privately issued, but not backed by assets, they means a clling value and this value is more volatile. It may go up,up, up, it may go down. In that sense, in the history of money it is difficult to think of them as money.
So my biggest point up to now is we have to differenciate, not ammount all these three as one and try to understand the risks.”

Trust, domestic stability and International stability must be protected for digital money to add rather to become a risk

“When we think about the critical issues to consider,”Georgieva pointed,”number one is trust. Is the public believeing in digital, in CNDC, in a stable coins. Is the private sector believeing that this is a means of exchange that they can trust. And of course, legal frameworks are critical, institutional frameworks are critical, for this trust.”

“The second issue,” she continued,” is domestic stability. Is this going to help to have more stable economic transactions?, can we have carefully designed public-private partnerships that provide for the economy rather than put it more on rocks?.

“And the last one is what we IMF and other institutions, International stability. We have to have regulations, we have to get rules in place if we want in the world of money digital to be a plus rather than a risk. And it is very impressive how much the international community, the Central Banks, institutions like ours are now actively engaged to make sure that in this fast moving world digitalisation money is a source of confidence and helps the economy function rather than a risk,” IMF Managing Director ended.

Image over the headline.- Kristalina Georgieva (Managing Director of the International Monetary Fund) during her contribution via videoconference at the G7 rising curtain event held at Boccoli University (Italy). Capture of the official video of the event offered on the IMF YouTube channel.

Related external links:

Listen what Kristalina Georgieva says about digital money (video)

Watch the whole G7 rising curtain event held at Universitá Boccoli (video)

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