The International Monetary Fund (IMF) staff members issued a guide for policymakers and banking institutions on ways to increase the uptake of central bank digital currencies (CBDCs) globally.
The IMF issued the ‘Central Bank Digital Currency Adoption Inclusive Strategies for Intermediaries and Users’ paper on Sept. 21. The paper recommended implementing inclusive strategies for intermediaries and end-users and introduced a high-level framework, the REDI framework, to help spur CBDC adoption.
According to the IMF staff members, successful CBDC adoption will require proactive strategic policy and design choices that benefit end-users and intermediaries. Therefore, they urged central banks to focus on stakeholder engagement.
The REDI framework—which stands for regulation, education, design and deployment and incentives—is curated by IMF staff members to help central banks improve CBDC adoption in their respective countries.
REDI framework for central banks to help CBDC adoption. Source: IMF
As shown above, the REDI framework focuses on four key pillars. The first sub-section, regulation, involves policymakers exploring potential regulatory and legislative measures to nurture CBDC adoption.
The education sub-section recommends developing communication strategies to build CBDC awareness, with central banks acting as a central point of communication. Thirdly, the paper highlighted the need for strategies targeting specific user groups and creating an extensive network of intermediaries.
The final sub-section recommended the introduction of monetary and non-monetary incentives to encourage the mass adoption of CBDCs. Subsidizing setup costs, transaction fees and taxes for merchants are some of the recommendations made by the IMF staff.
The paper also encouraged further discussions around pre-existing concerns:
“Certain policy issues, including sustainability of the CBDC system, ensuring integrity of the system, and balancing adoption with financial stability, will need to be explored further.”
Related: IMF backs Nigeria crypto adoption amid local SEC crackdown
In August, two IMF executives said that increasing the average crypto-mining electricity costs globally by as much as 85% through taxes could significantly reduce carbon emissions.
According to IMF Fiscal Affairs Department’s deputy division chief Shafik Hebous and climate policy division economist Nate Vernon-Lin, a tax of $0.047 per kilowatt hour “would drive the crypto mining industry to curb its emissions in line with global goals.”
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