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On Monday, IMF Managing Director Kristalina Georgieva announced that the International Monetary Fund (IMF) is developing a platform to facilitate transactions between countries using central bank digital currencies (CBDCs).
“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.
The IMF wants central banks to agree on a common regulatory framework for digital currencies that will allow global interoperability. She said that failing to agree on a common platform would create a vacuum that cryptocurrencies would likely fill.
A CBDC is a digital currency controlled by the central bank, while cryptocurrencies are nearly always decentralised.
114 central banks are already at some stage of CBDC exploration, “with about 10 already crossing the finish line”, she said.
“If countries develop CDBCs only for domestic deployment, we are underutilizing their capacity,” she added.
Georgieva highlighted that central bank digital currencies (CBDCs) can have two major benefits. Firstly, they can promote financial inclusion, making it easier for more people to access financial services. Secondly, CBDCs can make remittances (money transfers) cheaper, as the current average cost is 6.3% or $44 billion annually.
Georgieva clarified that central bank digital currencies (CBDCs) should have supporting assets. She also mentioned that cryptocurrencies can be seen as a good investment when they have asset backing. However, lacking such backing, they become speculative and risky investments.
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