The International Monetary Fund (IMF) is working to develop a platform that would serve as an interoperability layer for central bank digital currencies (CBDCs), allowing for settlements among different countries. According to statements from IMF Managing Director Kristalina Georgieva, this would avoid the underutilization of CBDCs for domestic purposes.
IMF Working on CBDC Cross-Border Integration Platform
The International Monetary Fund (IMF) is building a solution to integrate and support cross-border payments among central bank digital currencies (CBDC). According to IMF Managing Director Kristalina Georgieva, this would prevent underutilization of these currencies, expanding their usage to international markets.
At a conference in Morocco, Georgieva reinforced the need for interoperability. She stated:
CBDCs should not be fragmented national propositions. To have more efficient and fairer transactions we need systems that connect countries: we need interoperability.
Georgieva also remarked on the need for CBDC regulation on a global scale to support this interoperability use case. The failure to reach agreements on this subject would lead to the growth of cryptocurrencies as a substitute for the void created, Georgieva explained.
The official added that 114 central banks were involved in CBDC exploration projects, with ten already arriving at the finish line.
Some CBDC projects are already live. China is already using its CBDC, the e-yuan, to pay salaries in some regions of the country, while the Venezuelan petro, a state-issued digital currency, is facing a liquidation amidst a cryptocurrency corruption probe, according to recent reports.
Also, the European Central Bank (ECB) is in its final phases of deciding on issuing a digital euro that would be focused on providing payment rails to Europeans.
A Case for CBDCs
Georgieva stressed the benefits that the issuance of CBDCs might bring to countries adopting them, stating that if implemented currently, they might “help to increase inclusion” and “strengthen the resilience and efficiency of payment systems.”
The executive also commented that CBDCs could “make cross-border payments and remittances cheaper,” as the cost of transferring money across borders stands at 6.3%, an industry that brings service providers $44 billion annually.
Georgieva, who has advocated for anti-crypto regulation in the past, established differences between cryptocurrency assets and CBDCs, clarifying that, for her, the latter should be backed by assets. Furthermore, she stated that cryptocurrencies backed by assets could be considered investment opportunities, calling unbacked cryptocurrencies “speculative investments.”
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