IMF ponders ways to end people’s hesitancy to move away to cash

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One of the speakers at the 2022 International Monetary Fund (IMF)/World Bank Group (WBG) Annual Meetings, Kristalina Georgieva, IMF’s managing director, has revealed that this financial institution doesn’t like people using cash and wants to change that preference.

And while some rights and consumer protection groups as well as citizens might now be trying to understand why this would be IMF’s policy – the IMF, too, wants to “understand” some people’s “strong preference for cash.”

But that’s not to meet them half way in some sort of compromise going forward – it’s to create better campaigns to change people’s mind on this issue.

It’s not really rocket science – those who prefer cash prefer not to have banks and governments track every step of their financial activity (that also reveals lifestyle and behavioral patterns). In other words, they prefer privacy – and they also may not like getting cut off from their money at their government’s whim.

But Georgieva, formerly an EU and World Bank bureaucrat, doesn’t really bring up any of these basic concerns, and is looking for answers in other places.

“Is it lack of trust in the (digital) payment service providers? Is it a preference for informality, is it difficulty to access services? Or it is that it costs a little bit more for people for whom every penny counts?,” she wondered, and continued:

“We need to understand that so we can then make a proper information provision that covers for people – how not using cash is better to protect yourself against crime and how if you use digital money you can graduate from payments to credit and that of course enhances financial inclusion.”

One thing IMF’s “capacity development experts” do understand and don’t hide is that there is often a strong preference for cash despite the availability of digital wallets like that developed by the EU, and of mobile money.

But people unwilling to let go of cash is not the only problem the IMF is facing as it implements its agenda – another is hesitancy to use centralized and government-controlled Central Bank Digital Currencies (CBDCs).

IMF Deputy Managing Director Bo Li singled it out as one of the challenges in introducing , and suggested that while the IMF is yet to fully understand what drives that hesitancy among both customers and merchants, he has a solution.

“We need a better understanding of what’s the cause, what’s driving that hesitancy. One way to solve it relates back to our data question – that is if we can create enough value, if by joining this ecosystem if consumer can enjoy a lot more financial services, if they can get credit, they may be willing to join the ecosystem,” said Li.

This IMF official thinks that the same goes for merchants.

“If they can provide more service and if you can if they can earn a profit they’re going to be willing to join this ecosystem. So I think one way to solve this hesitancy is to create value by utilizing the data,” Li said.

The post IMF ponders ways to end people’s hesitancy to move away to cash appeared first on Reclaim The Net.


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