The IMF project on the global CBDC platform is aimed at enhancing the efficacy of payment systems.
The International Monetary Fund (IMF) has started working on a global CBDC platform as different countries race to create their central bank digital currencies. IMF Managing Director Kristalina Georgieva revealed the matter, noting the purpose of the project. She said that the aim of the global CBDC platform is to facilitate transactions between countries.
It is no news that many countries, including Japan and China, are working on their central bank digital currencies. More countries have also tested the use cases of their digital currencies, with plans for official launches soon. Currently, about 114 central banks are exploring CBDC. Hence, the IMF wants to reshape the financial landscape through the global CBDC platform. Georgieva emphasized the need for a unified platform while speaking at a conference for African central banks in Morocco. She said:
“CBDCs should not be fragmented national propositions… To have more efficient and fairer transactions we need systems that connect countries: we need interoperability. For this reason at the IMF, we are working on the concept of a global CBDC platform.”
She explained further that the association wants central banks worldwide to have a unified regulatory framework for crypto assets to enable global interoperability. Georgieva added that failure to have a common framework would result in a vacuum that would be filled by cryptocurrencies. With more than 110 countries at the stage of CBDC exploration and about 10 almost at the finishing line, the executive believes that CBDCs would be underutilized if their capacity is limited to just domestic deployment.
IMF Begins Work on Global CBDC Platform
Meanwhile, the IMF is working on using the global CBDC platform to promote financial inclusion, among others. It will give access to individuals currently exempted from the financial system, as CBDC has the potential to make financial services more affordable and accessible. The IMF project on the global CBDC platform also targets enhancing the efficacy of payment systems. There would be faster and cheaper alternatives for cross-border transactions. In addition, CBDCs could also offer cheaper remittances as the average cost of money transfers, according to Georgieva, is 6.3%, totaling $44 billion annually.
Furthermore, the financial agency knows the risks attached to a deregulated crypto framework. There have been concerns regarding cyber threats, data privacy, and more if there is no proper design for the system. To reduce the risks or totally avoid them, there is a need for a standard interoperable system like the global CBDC platform IMF is working on.
The director of the IMF monetary and capital markets department, Tobias Adrian, also gave a comment.
“Our blueprint for a new class of platforms would enhance and ensure greater interoperability, efficiency, and safety in cross-border payments, as well as in domestic financial markets. The cost, sluggishness, and opacity of cross-border payments comes from limited infrastructure,” noted he.
Adrian also supports the idea of a global CBDC platform that will permit capital controls.