IMF staff proposes REDI framework to boost CBDC adoption
Date: 2024-09-23 Author: Oliver Abernathy Categories: CRYPTO PAYMENTS
It focuses on regulation, education, design, and incentives to boost adoption of central bank digital currencies (CBDCs).
The IMF published a paper titled “Central Bank Digital Currency: Inclusive Strategies for Intermediaries and Users” on September 21. The paper recommends the implementation of inclusive strategies for intermediaries and end users. It presents a high-level framework for regulation, education, design, implementation, and incentives (REDI) to help boost CBDC adoption.
The IMF staff said that successful adoption of CBDCs will require proactive, strategic policy and design decisions that benefit both end users and intermediaries. They therefore urged central banks to focus on engaging with all stakeholders.
The REDI framework was developed by IMF staff to help central banks improve the adoption of CBDCs in their countries.
As shown above, the REDI framework focuses on four key aspects. The first aspect, regulation, involves exploring possible regulatory and legislative measures to promote CBDC adoption.
The education aspect recommends developing communication strategies to raise awareness of CBDCs, with central banks serving as the primary point of contact. The third aspect emphasizes the need to develop strategies that target specific user groups and create a broad network of intermediaries.
The final aspect recommends introducing monetary and non-monetary incentives to encourage mass adoption of CBDCs. Among the IMF staff’s recommendations are subsidies for start-up costs, transaction fees, and taxes for merchants.
In August, two IMF officials said that increasing the average global electricity cost for crypto mining by 85% through taxes could significantly reduce carbon emissions.
According to Shafik Hebus, deputy chief of the IMF's fiscal affairs department, and Nate Vernon-Lin, an economist in the climate policy department, a tax of $0.047 per kilowatt-hour "would help ensure that the crypto mining industry reduces its emissions in line with global targets."
