No ‘One Size Fits All’ Solution Exist for CBDCs, Claims IMF Managing Director Kristalina Georgieva


Central banks around the world are gearing up to take the fight to cryptocurrencies through Central Bank Digital Currencies (CBDCs), but there’s no “one-size-fits-all” solution for all economies, claims International Monetary Fund (IMF). Well-designed CBDCs are more stable when compared to unbacked crypto assets that are “inherently volatile”, Kristalina Georgieva, Managing Director, IMF, said during an Atlantic Council event. That said, the international financial institution also issued a warning to central banks that the foray into new technology could also undermine public trust in the entire financial system.

“There is no universal case for CBDCs because each economy is different. But financial stability and privacy considerations are paramount to the design of CBDCs,” Georgieva stressed after the IMF released a new paper that examines the future of CBDCs. She added that central banks are committed to minimising the impact of CBDCs on financial intermediation and credit provision.

“The countries we studied offer CBDCs that are not interest-bearing — which makes a CBDC useful, but not as attractive as a vehicle for savings as traditional bank deposits. Introducing a CBDC is about finding the delicate balance between developments on the design front and the policy front,” IMF Managing Director said.

“Countries are seeking to preserve key aspects of their traditional monetary and financial systems while experimenting with new digital forms of money. For those experiments to succeed, the paper we’re releasing today shows that policymakers will need to resolve many open questions, technical obstacles, and policy tradeoffs,” Kristalina Georgieva added.

The IMF paper, which focusses on the efforts of several central banks and their efforts to develop a CBDC, found there are several common issues facing digital currencies including their technology base and the tension between traditional fiat money and a digital version.

One reason central banks are looking at digital currencies is that people would not have to go through their bank to move cash between themselves and businesses, reducing costs for financial transactions.

The fund said central banks would have to consider trade-offs when looking at digital currencies. These would include anonymity, illicit use of money, risk reduction, and financial inclusion.

Kristalina Georgieva claims that if CBDCs were designed prudently, they could offer more safety, greater availability and allow for lower costs than private forms of digital money such as cryptocurrencies.

The paper from IMF also comes at a time when a handful of countries have already begun developing or have already introduced CBDCs. Unlike cryptocurrencies or stablecoins, which are private and based on blockchain technology, a CBDC is a digital version of a national currency and financially backed by the country’s central bank.

Indian Finance Minister Nirmala Sitharaman recently announced in her Budget 2022 address that the Reserve Bank of India (RBI) — the country’s central bank — is planning to launch its own digital rupee in FY 2022-23. The Bahamas, meanwhile, has a CBDC called the Sand while China’s central bank is trialing the e-yuan. Athletes at the Beijing Winter Olympics are able to use the virtual currency at sporting venues across the city.


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