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Cash’s biggest enemy has arrived, according to the International Monetary Fund

Cash’s biggest enemy has arrived, according to the International Monetary Fund

Central bank digital currency (CBDC) may be able to replace physical cash

– believes Kristalina Georgieva, Managing Director of the International Monetary Fund. According to him, central bank digital currencies could be especially useful in island countries, where cash circulation is expensive anyway. In more developed economies, it can provide flexibility and improve financial integration in areas where bank account penetration is low, he added.

Central bank digital currencies are digital versions of a country’s currency, regulated by a central bank based on blockchain technology. This technology allows central banks to direct government payments directly to households.

According to an IMF report, more than 100 countries – about 60% of the world’s countries – are considering the concept of central bank digital currencies. According to a 2022 survey by the Bank for International Settlements, 93% of the 86 central banks surveyed were investigating CBDCs, and 58% were considering issuing retail CBDCs in the short or medium term.

However, as of June, only 11 countries have adopted CBDCs. According to data from the American Atlantic Council, 53 other countries are in an advanced planning stage, and 46 countries are researching this issue.

Countries like The Bahamas, Jamaica and Nigeria have already issued residential CBDCs. The Monetary Authority of Singapore has stated that cash in general is not compatible with the digital economy, and expects demand for cash payments to continue to decline.

Cover image source: Getty Images

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