“The International Monetary Fund (IMF) is working on a platform for central bank digital currencies (CBDCs) on which transactions between countries will be based” – IMF Managing Director Cristalina Georgieva said in a statement on Monday.
“CBDCs (Central Bank Digital Currency) should not be fragmented national propositions… To have more efficient and fairer transactions, we need systems that connect countries: we need interoperability,” the IMF chief explained during a conference in Rabat, Morocco, attended by central banks from African countries.
“That is why at the IMF we are working on the idea of a global platform of CBDCs,” she added, referring to digital tokens to be issued by central banks, such as the digital euro.
The common regulatory framework for central bank digital tokens against the backdrop of crypto
The IMF’s objective is for central banks to reach agreement on a common regulatory framework for digital currencies (their exchange rates, how they operate, etc.) that allows for global interoperability. “Failure to agree on a common platform will create a gap that will most likely be filled by cryptocurrencies,” warned Georgieva.
And she clarified that CBDC is a digital currency controlled by a central bank, while cryptos are almost always “decentralised”.
Already, 114 central banks have started the process to be able to release CBDCs in the near future. One of them is the ECB, which is promoting the digital euro for transactions.
Why CBDCs – Georgieva’s warning on crypto
“If countries develop CBDCs only for domestic growth, we are under-utilizing their potential,” continued Georgieva, highlighting that digital tokens from central banks could give a much-needed boost to financial inclusion by making remittances cheaper.
As she disclosed, “the average cost of money transfers is 6.3% which is equivalent to $44 billion per year.”
The IMF chief made it clear that “CBDCs should be backed by assets”. She added that “cryptocurrencies are an investment opportunity when backed by assets”. But when they are not backed by assets they are “a speculative investment”, he further noted.
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