NEW YORK -- “Central banks will often issue central bank digital currency (CBDC) within the next 10 years. A good number of countries are already preparing for the upcoming cashless society by carrying out pilot tests.”

Tommaso Mancini-Griffoli, the deputy division chief in the Monetary and Capital Markets Department at the International Monetary Fund, made the remarks at the “Consensus 2019” blockchain conference held in New York Tuesday.

With respect to the definition of CBDC, Griffoli said, “I am often asked a question of whether CBDC could be built if the government, not the central bank, creates a private blockchain-based cryptocurrency and makes it ‘fiat money.’ But CBDC is a digital form of legal tender and must be issued by the central bank.”

According to him, countries looking to issue CBDC are divided into two categories broadly. One is a country seeking to be an “advanced economy” preparing for the future with the advent of cashless society; the other is a developing nation. As to why developing countries turn their eyes to CBDC, he said that if they issue CBDC, they could save costs needed to print paper money and manage currency.

Commenting on the moderator’s remark that some central banks look at CBDC issuance negatively, Griffoli said, “There must be risks in issuing CBDC. The initial cost to establish the CBDC system is particularly high. A great deal of effort is needed to sharpen technology and data management for keeping CBDC in order and revamp the central bank system.” Central banks should not solely look at the merit of CBDC because existing things must be altered across the board.

Yet the future painted by Griffoli is bright. Noting that CBDC will clearly serve as a milestone in the history of money, he said, “This implies that the function of money does not change but the structure of money develops according to the user’s demand.” His position is that a growing number of countries will issue CBDC within the next 5 to 10 years. “More companies rush to conduct CBDC pilot tests with the belief that CBDC can improve financial soundness. Of course, each country’s CBDC system is different, depending on the country’s economic condition. Proper designing and policy can lower risks alone,” Griffoli said. /yjk@decenter.kr

Janice Yunji Kim