IMF Develops Global Platform For Central Bank Digital Currency
According to the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, the organization is currently working on the creation of a platform to facilitate transactions between countries using central bank digital currencies (CBDCs). Speaking on Monday, Georgieva emphasized the IMF’s goal of establishing a common regulatory framework for digital currencies, allowing for seamless global interoperability.
She warned that the absence of such an agreement would potentially pave the way for cryptocurrencies to fill the void.
“CBDCs should not be fragmented national propositions… To have more efficient and fairer transactions we need systems that connect countries: we need interoperability,” Georgieva told a conference attended by African central banks in Rabat, Morocco.
“For this reason at the IMF, we are working on the concept of a global CBDC platform,” she said.
Georgieva clarified the distinction between CBDCs and cryptocurrencies, highlighting that CBDCs are controlled by central banks, whereas cryptocurrencies are typically decentralized.
Filling the void
Providing insight into the global landscape, she revealed that 114 central banks are currently exploring CBDCs, with approximately 10 already reaching significant milestones in their implementation.
The introduction of CBDCs holds the potential to promote financial inclusion and reduce the costs associated with remittances, Georgieva asserted.
“If countries develop CDBCs only for domestic deployment we are underutilizing their capacity,” she added.
She emphasized that the current average cost of money transfers, which amounts to 6.3% or $44 billion annually, could be mitigated through CBDC adoption.
Georgieva also emphasized the importance of CBDCs being asset-backed.
She acknowledged that while cryptocurrencies can present investment opportunities when supported by assets, they become speculative investments when lacking such backing.
