The International Monetary Fund (IMF) is reportedly working on a solution for central bank digital currencies (CDBCs) to support financial transactions between nations, IMF MD Kristalina Georgieva revealed on Monday (June 19, 2023).
As reported by Reuters, Georgieva told a conference attended by various reserve banks in Rabat, Morocco:
“CBDCs should not be fragmented national propositions… To have more efficient and fairer transactions we need systems that connect countries: we need interoperability. For this reason at the IMF, we are working on the concept of a global CBDC platform.”
The IMF would like reserve banks to agree on a common set of regulatory guidelines for virtual currencies that should enable interoperability across global platforms.
Not being able to agree on a unified platform may lead to a vacuum that might be filled by cryptocurrencies, she added.
A CBDC is a virtual currency that’s controlled by the reserve bank, meanwhile, cryptocurrencies are almost always implemented in a decentralized manner.
Currently, around 114 central banks across the globe are at a certain stage of CBDC experimentation/implementation, with around 10 presently “crossing the finish line,” she revealed.
She pointed out that if countries “develop CDBCs only for domestic deployment [they] are underutilizing their capacity.”
CBDCs may also assist with supporting greater financial inclusion and lead to more affordable remittance payments, she explained, adding that the typical cost of fund transfers is around 6.3%, amounting to approximately $44 billion on a yearly basis.
Georgieva emphasized that CBDCs need to be backed by real-world assets and mentioned that cryptocurrencies could be a potential investment opportunity when backed by actual assets, however, when they aren’t, they are considered to be “speculative” investment.
CBDC-focused projects have been under development for many years, with China appearing to take the lead when it comes to actually implementing CBDC-related use-cases in a real-world environment. At present, however, there’s no widespread consensus on the feasibility, potential benefits, as well as possible advantages/disadvantages that may come from issuing and transacting with a CBDC.
