Deputy Managing Director Bo Li’s Opening Remarks for Panel on the IMF Approach to Central Bank Digital Currency Capacity Development
IMF News, April 12, 2023
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- Published: April 12, 2023
Global interest in CBDC
- BIS 2021 CBDC survey covered "a record 81 central banks, representing close to 76 percent of the world’s population and 94 percent of global economic output."
- Survey findings:
- "nine out of 10 central banks are now exploring CBDCs"
- "half developing or running concrete experiments"
- "more than two-thirds of central banks are likely to issue a retail CBDC in the short or medium term (within the next six years)."
Demand for IMF assistance and engagement
- "By the end of February 2023, over 40 countries had approached the IMF to request assistance."
- "In the past two years, the IMF has started to engage with almost 30 countries."
- Countries request assistance on:
- objectives and design choices
- pilots
- analysis of macro-financial implications
- Rationale: "CBDC capacity development is essential to avoid a digital divide."
IMF approach, strategy, and deliverables
- Mandate context:
- IMF mandate to help ensure that digital money, including CBDCs, "foster domestic and international economic and financial stability."
- This mandate is outlined in the "Digital Money Strategy, which was endorsed by our Board in July 2021."
- Recent IMF outputs:
- An IMF policy paper on the "IMF Approach to CBDC Capacity Development" documenting emerging lessons, analytical findings, and policy views.
- Announcement of a CBDC Handbook: "a compendium of knowledge and experience on CBDC" intended as "the basis for capacity development" to help countries make well-informed decisions when designing and issuing CBDCs.
- Capacity development principles:
- Collaborative and inclusive approach involving "donors, external experts, the recipient countries, and the IMF" as equal partners.
- Strategies formed "after wide consultations" with a desire to receive continual feedback.
- Emphasis on working on new topics in a "fast-moving field of digitalization" and ensuring work proceeds "in the right direction."
Macroeconomic, financial stability, and cross-border implications
- Potential benefits of CBDC:
- "strengthen the usability, resilience, and efficiency of payment systems"
- "increase financial inclusion"
- "reduce the number of intermediaries in cross-border payments, foster competition and enhance transparency"
- Potential risks and challenges if poorly designed:
- "financial stability risks"
- "data privacy and legal challenges"
- "financial integrity and cyber risks"
- "central bank operational risks"
- Cross-border risks: "easy access to foreign CBDCs could lead to risks of currency substitution and capital flow volatility"
- Strategic IMF role: "monitor, and advise on, digital money developments for all our members recognizing the macro relevance of digital money and fintech developments of which CBDC is an increasingly significant element."
Deputy Managing Director Bo Li’s opening remarks (as prepared for delivery), April 12, 2023.