The International Monetary Fund (IMF) recently conducted a survey of 19 countries in the Middle East and Central Asia to explore the potential of central bank digital currencies (CBDCs) and their impact on financial inclusion. The survey found that CBDCs could promote financial inclusion and enhance the efficiency of international remittances. Many of the countries surveyed are currently exploring CBDCs at the research stage, with some, such as Bahrain, Georgia, Saudi Arabia, and the United Arab Emirates, moving to the more advanced “proof-of-concept” stage. Kazakhstan is the most advanced, having completed two pilot programs for the digital tenge.
The survey also highlighted the risks associated with CBDCs, including low digital and financial literacy, lack of identification, distrust of financial institutions, and low wealth. However, the IMF suggested that policymakers could mitigate these risks to financial stability by designing offline CBDCs that could benefit less internet-accessible areas with increased financial inclusion. Additionally, using CBDCs for international transfers could help lower the cost of sending remittances and speed up the transfer.
The IMF has been guiding central banks in exploring and developing CBDCs by establishing a step-by-step guide to address the risks. It has been using the 5P methodology: preparation, proof-of-concept, prototypes, pilots, and production. The IMF noted that it would continue engaging with central banks, assessing the potential effects of these central bank digital currencies on areas from financial stability to cybersecurity and cross-border payments.
