CBDCs can replace cash, improve cross-border payments: IMF chief at Singapore fintech event

IMF managing director Kristalina Georgieva says central bank digital currencies can improve financial inclusion in places where few hold bank accounts

The three-day Singapore FinTech Festival brings together fintech industry players, investors, government representatives and commercial and central banks

Reading Time:3 minutes

Kristalina Georgieva, managing director of the International Monetary Fund, at the Singapore Fintech Festival on Wednesday. Photo: Handout

Published: 8:45pm, 15 Nov 2023

Governments and central banks should step up the adoption of central bank digital currencies (CBDCs) to improve cross-border payments, which are currently “expensive, slow and available to few”, said Kristalina Georgieva, managing director of the International Monetary Fund (IMF).

In a keynote address at the Singapore FinTech Festival on Wednesday, Georgieva said CBDCs could not only replace cash, which was costly to distribute in island economies, but improve financial inclusion in places where few hold bank accounts. However, the pace towards using CBDCs needed to pick up, she said.

The three-day major technology event brings together 62,000 participants across the fintech industry globally as well as investors, government representatives, and commercial and central banks. Attendees include Amazon, Binance, Grab, HSBC and JPMorgan.

Kristalina Georgieva, managing director of the International Monetary Fund, views a digital exhibit at the Singapore FinTech Festival on Wednesday. Photo: Handout

“Adoption of CBDCs is nowhere close. But about 60 per cent of countries are exploring them in some form today,” Georgieva said. “To the extent CBDCs are deployed, they must be built to facilitate cross-border payments, which are at present expensive, slow, and available to few. Again, we must start this work today so we don’t have to back-pedal tomorrow.”

The Philippines understood the importance of the “financial inclusion” that Georgieva alluded to, President Ferdinand Marcos Jnr said in his keynote address at the event. The Southeast Asian country has one of the highest “unbanked” populations in the world or people without a bank account, according to the World Bank.

“[We] recognise the growing presence of digital banking, and the importance of inclusive finance for our financial landscape, so that no one will be left behind in our pursuit of progress and prosperity,” he said, adding that his government was focused on digitising the economy.

Country authorities looking to introduce CBDCs might need to think a little more like entrepreneurs who particularly flourish in a state like Singapore, Georgieva said.