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Former Georgian Finance Minister Nodar Khadouri signed a bill not so long ago that said that all digital currency in the country will be taxed. This bill has been introduced in 2019, so with it, the Georgian government showed that they fully support the currency code, as well as the Chinese blockchain.
This is evident since a few years ago, when the Georgian government decided to archive its national data with Chinese blockchain. In addition to all this, there are crypto ATMs in the major cities of Georgia: Tbilisi, Batumi and Kutaisi, so this further shows how much cryptocurrencies are traded in the country. So, it comes as no surprise that the country is looking to introduce its own digital currency in 2022. Let’s dive deeper into that.
Georgian Digital Currency Will be Live in 2022
In the big news just recently, the Vice governor of the NBG (National Bank of Georgia) Papuna Lezhava said that they plan to test their digital currency as soon as next year. According to their research, 85% of the central banks worldwide are already exploring the idea of issuing their own digital currencies.
Lezhava states that what is digital currency cannot be replaced by any other payment system in the world, and he notes that some of the countries in the world, like China and the Bahamas, are already in the implementation phase of their own digital currency. According to him, they see this as a big opportunity to be at the forefront of this new trend.
The CBDC not a Cryptocurrency
Georgian Digital Currency as an Idea
All digital currencies are based on blockchain technology, which is known for reducing costs and complexities of all financial transactions, while also adding transparency to those transactions. The implications of this blockchain technology are far-reaching, and they are present in every sector.
These digital currencies cannot be counterfeited, and they provide anonymity, unlike cred cards, as an example. So, the officials behind the project that will introduce digital currency in Georgia believe that the digital lari will help to improve the overall efficiency of the current payment system in the country, and it will promote financial inclusion in the country.
The NBG called fintech companies, financial institutions and all interested tech companies to help and support their idea of creating the digital lari, so this is further evidence that they are quite serious about this idea, and this will not be just the next crypto coin, it will be much more than that. These companies were invited to join the public-private partnership which will help smoothen the introduction of the digital lari.
Georgia is not alone in developing a digital currency, the US, the European Central Bank, and the Bank of Russia are also working on introducing their digital currency, but China seems way ahead of them, as they are on a trial basis with the digital yuan.
International Monetary Fund Director Believes in Digital Currency
The IMF cryptocurrency regulation states clearly that digital currencies supported by central banks are the most reliable and trustworthy form of digital money. Kristalina Georgieva, who is the MD of IMF states this and adds that to think of any cryptocurrency as a central bank currency is very difficult.
According to the stats of the IMF, 110 countries are exploring the possibility of introducing their own central bank digital currency. Georgieva said that the key challenge for all monetary authorities in the world is to guarantee the interoperability of these digital currencies.
Georgieva shares one concern though – whether these digital currencies, which would be backed by states, can be means of exchange that the general public will trust. Other concerns that need to be addressed is whether these CBDCs can guarantee and contribute towards the economic stability of the country, and how it would fit with some of the regulations imposed by organizations such as the Bank for International Settlements.
The innovation hub within the BIS leads several projects at once which have the purpose of testing the use of digital currencies issued by the states, and how they can be used in international transactions. There are joint trials by China, Hong Kong, Thailand and UAE, together with a CBDC test carried out by the Swiss National Bank and the Banque de France.
Kristalina Georgieva also adds that she is very impressed by the cooperation between international financial organizations and national monetary authorities regarding state digital currencies, and how much all those institutions are engaged in making sure that this will help the economy function better, rather than being a risk in this fast-moving digitalization world.
As mentioned above, the head of the IMF strongly disagrees with claims that cryptocurrencies can be viewed as money. Digital currencies issued by the central banks are the most reliable form of digital money. Cryptocurrencies are not stable and they can rise and fall very sharply, which goes against every definition of money throughout history.
Kristalina Georgieva finishes her address at the Italian academic event by stating that the world cannot afford itself another crisis such as the one with Greece after the global financial crisis, but the Old Continent is now better prepared to deal with such an issue should it arrive.
Governments need to make their next steps very carefully, and it can be concluded that the introduction of a digital currency by states such as Georgia is a welcome sight for the IMF, and any approved IMF coin is likely to have long-lasting effects on the countries’ economies.