The International Monetary Fund is working on a platform for central bank digital currencies (CDBCs) to enable transactions between countries, IMF MD Kristalina Georgieva said on Monday.
“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. Failure to agree on a common platform would create a vacuum that would likely be filled by cryptocurrencies, she said.
A CBDC is a digital currency controlled by the central bank, while cryptocurrencies are nearly always decentralised. Already 114 central banks, including the South African Reserve Bank, are 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 underutilising their capacity,” she added.
CBDCs could also help promote financial inclusion and make remittances cheaper, she said, noting that the average cost of money transfers stands at 6.3% amounting to US$44-billion annually.
Read: The road to regulated blockchains in South Africa
Georgieva stressed that CBDCs should be backed by assets and added that cryptocurrencies are an investment opportunity when backed by assets, but when they are not they are “speculative”. — Ahmed Eljechtimi, (c) 2023 Reuters
