IMF says central bank digital currencies can replace cash: ‘This is not the time to turn back’

Published

8 months ago

November 15, 2023

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Kristalina Georgieva, managing director of the International Monetary Fund, at a press conference at the IMF Headquarters on April 14, 2023.

Kevin Dietsch | Getty Images News | Getty Images

SINGAPORE — Central bank digital currencies have the potential to replace cash, but adoption could take time, said Kristalina Georgieva, managing director of the International Monetary Fund on Wednesday.

“CBDCs can replace cash which is costly to distribute in island economies,” she said Wednesday at the Singapore FinTech Festival. “They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts.”

CBDCs are the digital form of a country’s fiat currency, which are regulated by the country’s central bank. They are powered by blockchain technology, allowing central banks to channel government payments directly to households.

“CBDCs would offer a safe and low-cost alternative [to cash]. They would also offer a bridge to go between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks,” the IMF chief said.

The IMF has said that more than 100 countries are exploring CBDCs – or approximately 60% of countries in the world.

“The level of global interest in CBDCs is unprecedented. Several central banks have already launched pilots or even issued a CBDC,” the IMF said in a September report.

According to a 2022 survey conducted by the Bank for International Settlements, of the 86 central banks surveyed, 93% said they were exploring CBDCs, while 58% said they were likely to or may possibly issue a retail CBDC in either the short or medium term.

But as of June, only 11 countries have adopted CBDCs, with an additional 53 in advanced planning stages and 46 researching the topic, according to data from the Atlantic Council.

… this is not the time to turn back. The public sector should keep preparing to deploy CBDCs and related payment platforms in the future.

Kristalina Georgieva

Managing director, IMF

Referring to a 2018 speech by her predecessor Christine Lagarde, when the former IMF chief encouraged policymakers to follow the “winds of change” and explore the use of CBDCs, Georgieva said: “Five years on, I’m here to provide an update on that voyage.”

“First, countries did set sail. Many are investigating CBDCs and are developing regulation to guide digital money developments,” said Georgieva referring to the speech.

On Wednesday, the fund launched a CBDC handbook as a reference guide for policymakers around the world. Georgieva said many countries are investigating CBDCs and developing regulation to guide digital money developments.

“Second, we have not yet reached land. There is so much more space for innovation and so much uncertainty over use-cases,” Georgieva told an audience which included industry experts, investors and journalists.

“In some countries the case seems dim today, but even they should remain open to potentially deploy CBDCs tomorrow. Why?” said Georgieva. “This is not the time to turn back.”

“The public sector should keep preparing to deploy CBDCs and related payment platforms in the future. Fourth, these platforms should be designed from the start to facilitate cross-border payments, including with CBDCs,” the managing director said.

Potential of CBDCs

Countries that have issued retail CBDC include the Bahamas, Jamaica and Nigeria.

Singapore’s Monetary Authority of Singapore has said that cash is “generally incompatible” with the digital economy. In a 2021 report, the country’s central bank said the demand for cash as a means of payment is set to decline further.

According to the BIS, using CBDCs for cross-border payments could lower the costs of obtaining, storing and spending foreign currency, depending on design and regulations.

Georgieva also said that artificial intelligence “could amplify some of the benefits of CBDCs” by providing accurate credit scoring and personalized support.

Demand for generative AI has boomed following the release of OpenAI’s ChatGPT in November last year, which was estimated to have reached 100 million monthly active users within two months after launch.

“It could improve financial inclusion by providing rapid, accurate credit scoring based on various data. It could provide personalized support to people with low financial literacy,” said Georgieva.

“To be sure, we need to protect personal privacy and data security, and avoid embedded biases so we don’t perpetuate inequality but aim to reduce it. Managed prudently, AI could help,” she added.

Technology

Gen Z’s shopping decisions are heavily driven by TikTok and influencers, report finds

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6 hours ago

July 1, 2024

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Gen Z's shopping decisions are heavily driven by TikTok and influencers, report finds

Young Asian woman unboxing new purchase clothings from cardboard box that received from her online shopping retail delivery at home. She is happy and excited to see the content from the box. Online shopping, trustworthy parcel delivery service

D3sign | Moment | Getty Images

Generation Z in Asia-Pacific is taking fashion cues from idols and influencers, heavily driven by TikTok, a new KPMG report showed.

“Where past generations visited department stores or shopping malls to buy basics or check out new styles, Gen Z are looking for trends online, following idols and influencers and aspiring to wear the same clothing,” the report said.

The report surveyed 7,000 consumers across 14 markets including China, Singapore, Indonesia, Vietnam and the Philippines. Nearly half of the respondents in each market were in the Gen Z age group – defined as 18 to 24 years old in the survey.

Gen Z ranked social commerce (63%) and livestreaming commerce (57%) as important to their shopping experience, the survey revealed. Social commerce was the most popular form of retail tech among Gen Z – especially in China, Vietnam, Indonesia and the Philippines.

Gen Z is known as the first generation to grow up with the internet and digital devices as a part of daily life.

“The fusion of social media and e-commerce represents the frontier of engaging Gen Z in a way that resonates with their ethos,” said Irwan Djaja, partner and head of advisory of KPMG Indonesia.

Starbucks trying to revive Gen Z consumer with Boba tea, says Casey Lewis

As a result, brands are reassessing their supply chain strategies and emphasizing social commerce platforms to cater to Gen Z. They are particularly focused on TikTok and Instagram, where influencer recommendations play a very significant role.

“TikTok is a juggernaut. It is still growing and has an unbelievable number of viewers and influence,” said Eric Pong, co-founder of AfterShip, an e-commerce experience software-as-a-service company. Pong was one of the company executives interviewed in the report.

“TikTok business – strong in Asia – gets businesses to advertise on TikTok, using influencers and key opinion leaders and serving ads to direct viewers back to websites,” KPMG analysts said.

Technology

Amazon is doubling value of credits for some startups to build on AWS as Microsoft cloud gains ground

Published

2 days ago

June 29, 2024

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Amazon is doubling value of credits for some startups to build on AWS as Microsoft cloud gains ground

Amazon will double the value of credits it offers some startups to use its cloud infrastructure, CNBC has learned, as the company faces heightened competition from Microsoft in artificial intelligence services.

Starting July 1, startups that have raised a Series A round of funding in the past year will be eligible for $200,000 in credits through AWS’ Activate program, up from $100,000 before, the Amazon cloud unit said in an email to venture capitalists this week. Seed-stage startups will still be eligible for $100,000 in credits, AWS said.

Two people briefed on the changes confirmed the credit increase, though they asked not to be named because the information is private.

Matt Garman, who was recently promoted to CEO of AWS after running sales and marketing, was meeting with founders in Silicon Valley this week, the people said. Garman told the execs that collaborating with startups would always be a primary focus, one of the people said, adding that Garman described AI companies as AWS’ ideal customers.

An AWS spokesperson confirmed the increase in credits and Garman’s visit to Silicon Valley. The spokesperson added that in the past, the $100,000 would expire in one year, while the $200,000 credit will now expire in three years.

Amazon, which is best known for its massive online retail operation, derives most of its profit from AWS, a business it launched in 2006, well before rivals Microsoft and Google hit the scene. AWS leads the market, with $25 billion in revenue in the first quarter, up 17% from a year earlier.

But Microsoft Azure and Google Cloud are growing more quickly, and are benefiting from rapidly advancing AI models. Backed by Microsoft, OpenAI launched ChatGPT in late 2022 on Azure, and has since attracted a wave of AI workloads to Microsoft from companies big and small. Google has a number of large language models, most notably Gemini.

Amazon has been trying to catch up in generative AI and has poured billions of dollars into OpenAI challenger Anthropic.

Last month, AWS CEO Adam Selipsky announced his resignation after three years running the business, with Garman named as his successor. During Selipsky’s time at the helm, Microsoft and Google increased their share of the cloud infrastructure market. One analyst told CNBC that Microsoft “ran laps around” AWS in generative AI.

Startups have long been fertile ground for cloud infrastructure companies, as they try and lure ambitious founders who could be building the next multibillion-dollar business.

In November, Microsoft announced a partnership with Silicon Valley accelerator Y Combinator that would provide participating startups with $350,000 in Azure credits and access to graphics processing units (GPUs) for training AI models, a spokesperson said. Microsoft has since extended the $350,000 credit incentive to other accelerators, including the AI Grant.

Startups enrolled in Microsoft’s Founders Hub program, which doesn’t require previous venture funding, can receive up to $150,000 in Azure credits over four years.

In addition to its Activate offering, Amazon has a new 10-week generative AI accelerator program. Participants will be able to access up to $1 million in cloud credits, according to the website.

Earlier on Friday, Amazon’s head scientist, Rohit Prasad, told employees that the company has hired David Luan, co-founder and CEO of AI startup Adept, along with some of Luan’s colleagues. “Amazon is also licensing Adept’s agent technology, family of state-of-the-art multimodal models, and a few datasets,” Adept said in a blog post.

WATCH: AWS will boost investments in Singapore’s cloud infrastructure by $9 billion

Technology

Tech founders are shunning IPOs after extended market lull, survey finds

Published

2 days ago

June 29, 2024

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Tech founders are shunning IPOs after extended market lull, survey finds

Pedestrians pass the Nasdaq MarketSite in New York, US, on Tuesday, Jan. 2, 2024.

Michael Nagle | Bloomberg | Getty Images

Silicon Valley is known for producing tech businesses that start in garages and turn into massive publicly traded companies ubiquitously known across the globe. From Oracle and Microsoft to Google and Facebook, the public markets are responsible for turning ambitious tech founders into billionaires.

But the appeal of the IPO is waning, according to a survey published this week from startup accelerator Techstars. Of the 1,550 entrepreneurs surveyed by Techstars, only 15% said their long-term goal is an IPO. That’s down from 16% a year earlier.

Following an extended bull market in high-growth software and internet stocks, the tech IPO market collapsed in 2022 due to soaring inflation and rising interest rates, which pushed investors out of risk, slashed valuations and led many later-stage companies to delay their plans to go public.

The prior year was a record period for new offerings, with companies including Roblox, Robinhood, Rivian and UiPath hitting the market. There have been scant few notable tech IPOs in the past two and a half years.

“In combination with the lack of confidence that IPOs will bounce back in short order, this year’s data further underlines the trend that startups are staying private for longer, and IPOs are out of favor with the vast majority of early-stage entrepreneurs,” Techstars said in its report.

For 34% of entrepreneurs surveyed, the preference is to get acquired by a publicly traded company, down from 36% last year, while 30% indicated their goal is to remain private or independent, up from 28% in the prior report.

The trading floor of the New York Stock Exchange (NYSE) prepares for the social media platform Reddit’s initial public offering (IPO) on March 21, 2024 in New York City.

Spencer Platt | Getty Images

Investment banks have been gearing up for a rebound.

Colin Stewart, the Global Head of Technology Equity Capital Markets at Morgan Stanley, told CNBC in April that “the IPO market’s back,” predicting that 10 to 15 tech companies might go public by the end of the year. Stewart cited high priced and well traded IPOs as “bod[ing] well for the future.”

Stewart’s comments came after Reddit went public in March, becoming the first major social media company to hold an IPO since Pinterest in 2019. Astera Labs, which sells data center connectivity chips to cloud and artificial intelligence infrastructure companies, went public the same week, followed by data-management company Rubrik in April.

Prior to that, there was a brief jump in activity in September, when chip designer Arm, grocery delivery company Instacart and cloud software vendor Klaviyo debuted.

However, in comparison to the pre-2022 stretch, it’s been mostly quiet for new tech companies on Wall Street. Uncertainty surrounding the presidential election in November is pointing to a dearth of deals for the remainder of the year.

“We have the upcoming election, which is not helping the market in H2,” Athena Theodorou, head of software banking in the Europe region at UBS, told CNBC’s “Squawk Box” on Wednesday. “We do expect the market to remain muted in H2,” Theodorou said, though she said that in Europe the IPO market has started to show signs of life.

WATCH: IPO market is coming back in Europe