IMF Official Says Public-Private CBDC Offers Best of Both Worlds

Tommaso Mancini-Griffoli, a representative from the International Monetary Fund, believes that a synthetic private-public partnership could be the best way forward for a central bank digital currency.

A synthetic private-public partnership CBDC, on the other hand, is gaining popularity among the digital currency world and will empower private sectors such as blockchain backed stablecoins to continue to innovate.

The public sector remains focused on regulation and underpinning trust.

According to Mancini-Griffoa, unlike the original idea of CBDC which requires the central banks issuing a liability directly to the public, a synthetic CBDC allows the private sector to issue a liability that is used by people to purchase assets for payments.

A regulated environment may provide an equal playing field for all the private sector stablecoin innovators to continue to grow.

Much of the cost and risk for the public sector, such as technology choices, customer management, customer screening and monitoring including for Know Your Customer, Anti-Money Laundering, and regulatory compliance.

Data management would be transferred to the private sector.

Mancini-Griffoa pointed out that the best way to design a private and public partnership is an ongoing debate, as is deciding who should have the ability to issue the aforementioned tokens.

"The question is where do you draw the line of what the public sector does and what the private sector does. The fundamental question is about issuing. Does the public sector issue and the private distribute or do we also allow the private sector to issue?".

"The banking sector is essentially funded by wholesale, and there wouldn't be an enormous move of deposits away from banks towards a new system of payments."