The International Monetary Fund (IMF) is reportedly working on a global infrastructure for central bank digital currencies (CBDCs) that ensures there is global interconnectedness or interoperability in payment settlements. The global financial institution's Managing Director, Kristalina Georgieva, disclosed this today (Monday) during a conference for African central banks held in Rabat, Morocco, according to Reuters.
Breaking 'Settlement Blocks'
Speaking during the conference, Georgieva said that the platforms underpinning CBDCs should be interconnected to avoid the emergence of ‘settlement blocks’. CBDCs are digital alternatives to the currencies issued by central banks. With the growing popularity of crypto, several countries are gaining interest in CBDCs.
"CBDCs should not be fragmented national propositions," Georgieva said. "To have a more efficient and fairer transaction, we need systems that connect countries: we need interoperability."
Besides that, Georgieva said that the IMF wants central banks globally to agree on a common regulatory framework for CBDCs. Without a common framework, she noted, there would be a vacuum that would likely be filled by cryptocurrencies. The difference between a CBDC and a cryptocurrency is that the former is controlled by a central bank, while the latter is decentralized.
Out of over a hundred central banks exploring CBDCs globally, ten were almost 'crossing the finish line', the IMF top executive said. She added that for central banks in different countries to realize the full potential of CBDCs, they should look beyond domestic deployment.
CBDCs and Financial Inclusion
According to Georgieva, CBDCs promote financial inclusion and can bring down the cost of global money transfer, which currently stands at 6% or more than $44 billion globally. However, she emphasized that CBDCs should backed by real assets.
"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," added Tobia Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department at IMF.
Adrian further noted that: "As money, CBDCs provide safety. As infrastructure, CBDCs bring interoperability and efficiency among private networks for digital money and assets." Regarding security, the official said that countries could restrict transactions in foreign currencies and impose anti-money laundering measures.
Beeks' new contract; ex-Scope Markets' exec at Titan FX; read today's news nuggets.
This article was written by Jared Kirui at www.financemagnates.com.