The International Monetary Fund (IMF) is building a system for digital currencies issued by central banks, which will enable transactions between different countries. This was shared by IMF’s Managing Director, Kristalina Georgieva.
“Digital currencies issued by central banks shouldn’t be confined to individual countries. For transactions to be more efficient and fair, we need systems that link different countries together – we need them to work together seamlessly,” Georgieva said at a conference for African central banks in Rabat, Morocco.
She added, “That’s why we at the IMF are working on creating a worldwide platform for these digital currencies.”
The IMF wants central banks worldwide to agree on a shared regulatory framework for digital currencies, which would allow for global compatibility. Without such a common platform, cryptocurrencies could fill the gap, she warned.
Central bank digital currencies (CBDCs) are digital versions of a country’s currency, managed by its central bank. On the other hand, cryptocurrencies like Bitcoin are usually not centrally controlled.
Georgieva mentioned that 114 central banks are currently exploring CBDCs, with about 10 having already launched their own.
She pointed out that if countries develop CBDCs for domestic use only, they are not making full use of their potential.
Additionally, Georgieva suggested that CBDCs could help include more people in the financial system and reduce the cost of sending money overseas. She highlighted that the average cost of international money transfers is 6.3%, which adds up to $44 billion each year.
She emphasized that CBDCs should be backed by assets.