The IMF (International Monetary Fund) is currently working on a platform for CBDCs (Central Bank Digital Currencies) that will connect various countries and currencies. This announcement was made by the IMF Managing Director, Kristalina Georgieva, during a conference attended by African central banks in Morocco.
Established in 1944, the International Monetary Fund (IMF) is a global financial institution with a mission to promote international monetary cooperation, exchange stability, and orderly exchange arrangements. It is headquartered in Washington, D.C., and boasts over 180 member countries.
The IMF has several main functions, including providing loans to member countries facing balance of payments difficulties, offering economic policy advice to member countries, and monitoring the global economy.
Central Bank Digital Currencies (CBDCs) are digital currencies issued by central banks. They function similarly to physical cash, as they are backed by the central bank and denominated in the sovereign currency. However, CBDCs exist electronically and are transacted digitally instead of in physical form.
There are two primary types of CBDCs: wholesale and retail. Wholesale CBDCs are intended for use by financial institutions, such as banks and payment processors. Retail CBDCs, on the other hand, are designed for use by the general public.
During her speech at the conference, Kristalina emphasized that CBDCs should not create a fractured system between nations. Instead, they should be developed to promote efficiency, transparency, and interoperability worldwide.
Over 100 countries developing CBDCs
According to the Managing Director (MD), more than a hundred nations are currently exploring Central Bank Digital Currencies (CBDCs), with around 10 nearing deployment. The MD emphasized the International Monetary Fund’s (IMF) vision of achieving a unified regulatory framework for CBDCs among central banks worldwide. If an agreement cannot be reached, she predicts that cryptocurrencies will bridge the gap.
The emergence of cryptocurrencies has sparked discussions about the need for global CBDCs. Central banks aim to have a digital financial asset under their control, similar to cryptocurrencies but with centralized oversight. Cryptocurrencies offer a global reach, enabling anyone with internet access to use most digital currencies.
Ms. Kristalina believes that while developing CBDCs for national use is beneficial, a global system would be even more advantageous. Otherwise, she states that we would be underutilizing their potential capacity.