Grace Ashiru
IMF’s Managing Director, Kristalina Georgieva, has announced the development of a platform for central bank digital currencies (CBDCs) by the IMF. This platform aim to streamline transactions among countries.
CBDCs, which are distinct from cryptocurrencies in that they are regulated by central banks rather than being decentralized, should not be seen as isolated national initiatives, Georgieva stated. She stressed the necessity for a system that interlinks countries for efficient and equitable transactions.
“We are developing a worldwide CBDC platform at the IMF,” Georgieva revealed. She explained the importance of central banks adopting a unified regulatory structure for digital currencies to enable global interoperation.
She warned that any failure to form an agreement around a shared platform could create a void that cryptocurrencies might usurp. Georgieva also disclosed that about 114 central banks are already in the exploratory stages of CBDCs, with nearly 10 having completed their journey.
Georgieva also highlighted the importance of having assets backed by CBDCs. She expressed that cryptocurrencies provide an investment prospect when assets back them; however, they remain speculative investments without any backing.
Georgieva observed that the potential of CBDCs is underutilized if countries limit their development to domestic use. She also noted that CBDCs have the potential to expand financial inclusion and decrease the cost of remittances, which currently average 6.3%, amounting to an annual cost of $44 billion.
