On Monday, IMF Managing Director Kristalina Georgieva said that the International Monetary Fund (IMF) is working on a system for CDBCs (central bank digital currencies) to enable financial transactions amongst nations.
Kristalina Georgieva on Central Bank Digital Currency
Speaking at the conference in Rabat Morocco, Georgieva said, “CBDCs should not be fragmented national propositions… To have more efficient and fairer transactions we need systems that connect countries: we need interoperability”. She was speaking to the African central banks in attendance. She further stated, “For this reason at the IMF, we are working on the concept of a global CBDC platform.”
The IMF wants the central banks to support a common governing body for digital currencies. This would pave the way for global interoperability. If this is not mutually agreed, it will create a vacuum leading to cryptocurrencies filling the need instead.
What is CBDC?
For the uninitiated, a CBDC is a digital currency that is controlled and handled by the central bank. Cryptocurrencies are mostly decentralised.
Kristalina also said that around 114 central banks are exploring CBDC “with about 10 already crossing the finish line”. She added, “If countries develop central bank digital currencies only for domestic deployment we are underutilising their capacity.”
Also Read: RBI to Introduce India’s Digital Currency by 2023
Benefits
Apart from the fact that CBDCs shall promote financial inclusion, they would make remittances economical as well. Currently, the charge for money transfers is at 6.3% which, amounts to $ 44 billion annually.
Georgieva emphasised that CBDCs are to be backed by assets. She added that when backed by assets, cryptocurrencies are also an investment opportunity. However, they are mere speculative investments when they are not backed appropriately.
