The International Monetary Fund (IMF) is reportedly developing a global platform for cross-border transactions involving central bank digital currencies (CBDCs), according to Reuters.
IMF Managing Director Kristalina Georgieva emphasized the need for CBDCs to go beyond fragmented national offerings. She stated, “To have more efficient and fair transactions, we need systems that connect countries: we need interoperability.”
This is the primary reason why the IMF has initiated the creation of a global platform for national cryptocurrencies, Georgieva underscored.
The IMF’s experts aim to establish a unified regulatory framework for CBDCs that ensures operational compatibility. Georgieva believes that the failure to agree on a common approach will create a vacuum that is likely to be filled by cryptocurrencies.
According to her, 114 central banks are at various stages of CBDC exploration, with approximately 10 of them already crossing the finish line.
Georgieva asserted that if countries develop CBDCs solely for domestic deployment, they would not fully leverage the potential of these assets. She argued that central bank digital currencies could contribute to expanding access to financial services and reducing the cost of remittances. Georgieva pointed out that the average fee for such transactions stands at 6.3%, with total charges amounting to $44 billion annually.
Georgieva emphasized that CBDCs must be asset-backed. She expressed confidence that cryptocurrencies without underlying assets are merely “speculative investments.”
In May, the IMF released a report on Africa’s first CBDC, the eNaira in Nigeria, commending the country’s efforts in developing it.
Developing a global platform for CBDCs could have a significant impact on the financial infrastructure and promote further acceptance of digital currencies as an effective means of conducting cross-border transactions. Establishing a unified regulatory framework would help mitigate risks and enhance transparency in the realm of digital currencies, fostering trust and acceptance of CBDCs as legitimate forms of payment.
Furthermore, the IMF’s global platform has the potential to stimulate economic growth and development, particularly in countries, especially in developing regions, where access to financial services may be limited. CBDCs provide opportunities for expanding financial inclusion, allowing individuals without bank accounts or traditional financial services to participate in economic activities and make payments using digital means.
However, implementing a global platform for CBDCs also presents challenges. Ensuring consistency across different jurisdictions and central banks regarding regulation, technical standards, and security is crucial. It is also important to develop mechanisms to prevent money laundering, terrorist financing, and other illicit activities when using CBDCs.
The International Monetary Fund plays a key role in coordinating efforts among countries and facilitating collaboration in the realm of digital currencies. The creation of a global platform represents a significant step toward the development of digital financial instruments and ensuring their stability and effectiveness at the international level.
It is expected that in the coming years, the development of digital currencies and CBDCs will continue, and the IMF’s global platform will play a significant role in shaping an international financial landscape based on digital technologies and innovations.
