According to IMF Managing Director Kristalina Georgieva, the IMF is developing a framework for central bank digital currencies (CDBCs) to facilitate transactions between nations.
Unlike cryptocurrencies, which are almost always decentralized, CBDCs are digital currencies that are managed by the government’s central bank.
“CBDCs should not be fragmented national propositions… we need systems that connect countries: we need interoperability, according to Georgieva, To have more efficient and fairer transactions.”
“For this reason, at the IMF, we are working on the concept of a global CBDC platform,” Georgieva stated.
The IMF wants central banks to agree on a common regulatory framework for digital currencies that will allow global interoperability. Failure to agree on a common platform would create a vacuum that would likely be filled by cryptocurrencies, Georgieva continued.
Already 114 central banks are at some stage of CBDC exploration, “with about 10 already crossing the finish line”, ” according to Georgieva.
Georgieva emphasized the need for assets to support CBDCs and said that when they are, cryptocurrencies present an investment opportunity, but when they are not, they are only “speculative investments.”
“We are underutilizing their capacity if countries develop CDBCs only for domestic deployment,” Georgieva noted.
Georgieva added that the average cost of remittances is 6.3%, or $44 billion annually and that CBDCs might assist advance financial inclusion and lower remittance costs.
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