The International Monetary Fund (IMF) is working on a platform for central bank digital currencies (CDBC) to enable transactions between countries, IMF Managing Director Kristalina Georgieva said on Monday.
“CBDCs should not be fragmented national proposals… For more efficient and fair transactions, we need systems that connect countries: we need interoperability,” Georgieva said at 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 ensure global interoperability. Failure to agree on a common platform will create a vacuum that will likely be filled by cryptocurrencies, she said.
Already 114 central banks are at some stage of the CBDC study, she said, “about 10 of them have already crossed the finish line.”
“If countries develop CDBC only for domestic deployment, we underutilize their capabilities,” she added.
CBDCs can also help expand financial inclusion and make remittances cheaper, she said, noting that the average cost of remittances is 6.3%, which is $44 billion a year.
Georgieva emphasized that CBDCs should be asset-backed and added that cryptocurrencies represent an investment opportunity when they are asset-backed, but when they are not backed, they are “speculative investments.”
Platform Details
More details on the platform, called the XC platform (cross-border payments and contracting), were disclosed in a note. IMF in financial technology. The note was co-written with the Director of Foreign Exchange and Capital Markets at the International Monetary Fund and released on the same day as the announcement.
“XC platforms offer a secure single ledger — a document representing property rights — on which standardized digital representations of central bank reserves in any currency can be exchanged.”