The International Monetary Fund is working on a global platform to make central bank digital currencies (CBDCs) launched by many of the world’s governments more interoperable, Reuters reported Monday.
The agency believes that widespread agreement on such a platform may be necessary to ensure that private market cryptocurrencies do not fill their functional void.
Preparing for a world of CBDCs
Kristalina Georgieva, Managing Director of the International Monetary Fund He said On Monday, the agency’s platform aims to enable cross-country CBDC transactions.
“Central bank digital currencies should not be piecemeal national propositions,” Georgieva told African Central Banks at a conference in Rabat, Morocco. “For more efficient and fairer transactions we need systems that connect countries: we need interoperability”
“For this reason, we at the IMF are working on the concept of a global CBD platform,” she added.
A central bank digital currency is a digital native currency issued by a central bank, much like traditional fiat currencies. It may be backed by fiat currency or other assets such as gold, or treated as equivalent to those assets by the central bank. Georgieva emphasized that when cryptocurrencies are not designed in this way, they are “speculative investments.”
some alleged benefits Central bank digital currencies include promoting and reducing financial inclusion payment costs. Remittance fees currently average 6.3%, which equates to $44 billion a year.
“If countries only develop CDBCs for domestic dissemination, then we are underutilizing their capacity,” she added.
The Director General noted that there are already 114 countries exploring CBDCs in some capacity, with 10 “already crossing the finish line.” However, many are still in the early stages, with countries such as the United States and Canada continuing to question whether or not developing one is worth the trouble.
Opposition to private encryption
Classic decentralized cryptocurrencies such as Bitcoin have also been lauded as a potential tool for cheap remittances. El Salvador filed a legal tender for bitcoin in 2021 and launched a state-sponsored goat purse With the primary focus on this feature.
The International Monetary Fund has never been a fan of the adoption of bitcoin in El Salvador, fearing that the state of the asset’s currency could destabilize the economy. El Salvador’s President Nayib Bukele continues to do so contempt their advice.
Private stablecoins such as Tether (USDT) and Circle’s USDC have also come under scrutiny for their ability to de-peg, and the risks surrounding their reserves. In a five-point cryptocurrency regulation scheme recommended by the International Monetary Fund earlier this year, it indicated that stablecoin issuers such as banks should be regulated.
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