The demand for central bank digital currencies (CBDCs) is at an “unprecedented” high. This has resulted in a high need for guidance from the International Monetary Fund (IMF). In response, the IMF announced plans to publish a CBDC manual in a recent address by deputy managing director Bo Li. Its goal is to help central banks and governments throughout the world implement CBDCs.
The “IMF Approach to Central Bank Digital Currency Capacity Development” paper, which was made public on April 10, details the IMF’s multi-year approach for assisting CBDC rollouts. This manifesto also includes the establishment of an operating “CBDC Handbook” for monetary authorities to follow. Li said, “The Handbook will be a compendium of knowledge and experience on CBDC. It will be the basis for capacity development and hopefully, help countries make as well-informed decisions as possible when taking the major step to design and issue their own CBDC.”
The CBDC Handbook is currently designed for medium- to high-level policymakers in central banks and ministries of finance, as well as to some extent in other government agencies. “The Handbook will mostly be descriptive rather than prescriptive,” the IMF says, “offering information, experience, empirical findings, and frameworks to evaluate CBDC.” It is intended to be a living text with at least 19 chapters that will be released in stages over the following four to five years.
According to the IMF source, there is considerable urgency in satisfying the demands of central banks developing CBDCs. As a result, in the last two years, the organisation has worked with around 30 countries that have sought aid. So far, over 40 countries have contracted it, according to Li. “We believe CBDC capacity development is essential to avoid a digital divide,” said Li.
The Handbook will identify the most commonly asked CBDC questions, such as CBDC policy objectives and operational structure. Legal considerations, cyber resilience, central bank governance, and regulation and supervision are all prerequisites for issuing CBDC. CBDC design processes, considerations, and options are discussed, as well. The project methodologies and technology and potential macrofinancial consequences of CBDC are mentioned too.
There are multiple reasons for this handbook. CBDC and digital currency eliminate total anonymity. It also has the danger of recording every transaction while being entirely programmable, which means that financial institutions and their clients might have complete control over where, when, and how your money is spent.
Speaking at an IMF conference on October 19, 2020, BIS general manager Augustin Carstens highlighted that a CBDC allows the central bank “absolute control” over the usage of the CBDC, as well as the technology to enforce that control. In October 2022, The same guy who is currently applauding the CBDC Handbook, IMF deputy managing director Bo Li, detailed how CBDCs are possibly programmed.
“By programming CBDC, those [sic] money can be precisely targeted for what kind of people can own and what kind of use this money can be utilized,” he said.
CBDC is a system ideal for absolute monitoring and control over many parts of society, and it paves the way for an authoritarian social credit system. Furthermore, a CBDC that is poorly designed may provide a number of dangers. To remedy the knowledge gap, the IMF will publish a CBDC guidebook that will serve as “the foundation for capacity development.” An IMF staff paper went into additional information about the future guidebook.
