Even though cryptocurrencies don’t have the best reputation around the world, CBDCs are doing well.Â
In the past few months, more people have been talking about Central Bank Digital Currencies (CBDCs). Global regulators and politicians are working hard to learn more about CBDCs and assess this new technology.
Now, the latest news says that the International Monetary Fund (IMF) is creating a platform for digital currencies from central banks. On Monday, IMF Managing Director Kristalina Georgieva said that the IMF is working on the platform to make it easy for countries to facilitate business with each other.
JUST IN: International Monetary Fund is developing a digital currency platform to enable transactions between countries.
— Watcher.Guru (@WatcherGuru) June 19, 2023
At a meeting in Rabat, Morocco, where African central banks were present, 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.”
IMF Initiating a Global CBDC platform
Moreover, she said, “For this reason at the IMF, we are working on the concept of a global CBDC platform.”
In addition, the IMF has said that it wants central banks to agree on a single set of rules for digital currencies. This would make it possible for them to work together around the world. She said that if there wasn’t such an agreement, it could leave a space that cryptocurrencies could fill.
A central bank-issued digital currency, or CBDC, is different from a cryptocurrency. CBDCs are controlled by the central bank, whereas cryptocurrencies are decentralized.
When Georgieva talked about the growth of CBDCs around the world, she said that 114 central banks are exploring CBDCs at some point. She also said that “about 10 already crossing the finish line”.Â
Additionally, she said that CBDCs could help promote financial inclusion and make remittances cheaper. The average cost of money transfers is 6.3%, which adds up to $44 billion a year.
“If countries develop CDBCs only for domestic deployment we are underutilizing their capacity,” she added.
Moreover, she emphasized the significance of asset backing for CBDCs. Georgieva said that CBDCs should be backed by assets. She also stated that cryptocurrencies constitute a good investment when assets back them, but transform into a “speculative investment” when lacking asset backing.
