IMF working on global platform for exchange of CBDCs to avoid economic fragmentation
The International Monetary Fund (IMF) is working on a platform to enable countries to transfer transactions between central bank digital currencies (CBDCs) from different countries.
According to Reuters, managing director Kristalina Georgiva 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 said.
CBDCs are a new form of money, guaranteed by a central bank, which share many of the same characteristics as cash. They are distinct from cryptocurrencies, which are typically unbacked.
Over 100 central banks around the world, including the UK, are working on developing a CBDC.
Many justifications for CBDCs have been offered, including the declining use of cash, financial inclusion and maintaining monetary sovereignty. Another argument often given is that they can improve the efficiency of cross-border payments.
But Georgiva warned that CBDCs could further economic fragmentation if “settlement blocks” emerged. For this reason she said the IMF was “working on a principle of interoperability.”
“If countries develop CDBCs only for domestic deployment we are underutilising their capacity,” she said.
Georgiva said central banks would “pursue relentlessly” the development of CBDCs.
At the same event, director of the IMF’s monetary and capital markets department Tobias Adrian, said the body’s plans for a global CBDC platform would “enhance and ensure greater interoperability, efficiency and safety in cross-border payments”.
He said “the cost, sluggishness and opacity” of international payments stemmed from “limited infrastructure” which could be improved through a CBDC platform.