IMF Pioneering CBDC Cross-Border Integration Platform
The International Monetary Fund (IMF) is spearheading an innovative initiative to allow cross-border transactions using central bank digital currencies (CBDCs). IMF Managing Director, Kristalina Georgieva, highlighted the pressing need for connected systems, emphasizing that CBDCs should transcend national boundaries to facilitate more equitable and streamlined transactions.
IMF Develops Platform for Interoperability Among CBDCs
The IMF is actively developing a cutting-edge platform that will foster seamless interoperability between these digital currencies, empowering nations to engage in efficient settlements and eliminating the underutilization of CBDCs on the domestic front, while expanding their usage to international markets.
At a conference in Morocco, Georgieva reinforced the need for interoperability. She stated:
"CBDCs should not be confined to individual nations. To enhance transactional efficiency and fairness, we require systems that link countries together—an imperative for achieving true interoperability."
Georgieva stressed the importance of establishing global regulations governing CBDCs. Failure to reach a consensus on this crucial matter could potentially pave the way for the proliferation of cryptocurrencies as substitutes, further complicating the financial landscape.
Georgieva disclosed that a staggering 114 central banks are actively exploring CBDC projects, with ten already making substantial progress.
Notably, some CBDCs are already operational, such as China's e-yuan, which is utilized for salary payments in select regions. Meanwhile, recent reports indicate that the Venezuelan petro, a state-issued digital currency, faces liquidation due to a cryptocurrency corruption investigation.
Additionally, the European Central Bank (ECB) is in the final stages of deliberation regarding the issuance of a digital euro, primarily aimed at facilitating seamless payments for European citizens.
Georgieva Highlights Advantages of CBDC Adoption
Georgieva highlighted the advantages of CBDC adoption and its potential to foster financial inclusion and fortify the resilience and efficiency of payment systems. She stated that if implemented currently, they might “help to increase inclusion” and “strengthen the resilience and efficiency of payment systems.”
The IMF director further emphasized that CBDCs can "make cross-border payments and remittances cheaper," as the current cost of international money transfers stands at a staggering 6.3%, generating an annual revenue of USD 44 billion for service providers.
Drawing a clear distinction between cryptocurrencies and CBDCs, Georgieva affirmed her preference for asset-backed CBDCs. She contended that cryptocurrencies backed by tangible assets could be deemed viable investment opportunities while cautioning against unbacked cryptocurrencies as "speculative ventures."
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