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IMF Cautiously Approves Central Bank Digital Currencies

The IMF has recently recommended to central banks worldwide to explore the introduction of Central Bank Digital Currencies, but to proceed with caution.

However, the 189 member-country organization has warned central banks to proceed with caution, outlining various risks of issuing central bank digital currencies. Among them, the most prominent are risks to the banking systems within countries. As the IMF says, “Deposits could be withdrawn from commercial banks, should people decide to hold CBDC in significant volume.”

Interestingly, the organization suggested that “Some central banks are concerned by the increasing concentration of the payment system in the hands of few very large companies (some of which are foreign). In this context, some central banks view CBDC as a means to enhance the resilience of their payment system.”

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