The International Monetary Fund is working on a platform for central bank digital currencies (CDBCs) to enable transactions between countries,this was made known by the  IMF Managing Director Kristalina Georgieva early this week during a visit to Rabat, Morocco.

 “CBDCs should not be fragmented national propositions… To have more efficient and fairer transactions, we need systems that connect countries: we need interoperability.” Georgieva told a conference attended by African central banks in Rabat, Morocco.

“For this reason, at the IMF we are working on the concept of a global CBDC platform,” she said.

To have more efficient and fairer transactions, we need systems that connect countries: we need interoperability

The IMF wants central banks to agree on a common regulatory framework for digital currencies that will allow global interoperability. Failure to agree on a common platform would create a vacuum that would likely be filled by cryptocurrencies, she said.

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A CBDC is a digital currency controlled by the central bank, while cryptocurrencies are nearly always decentralised. Already 114 central banks, including the South African Reserve Bank, are at some stage of CBDC exploration, “with about 10 already crossing the finish line”, she said.

“If countries develop CDBCs only for domestic deployment, we are under utilising their capacity,” she added.

CBDCs could also help promote financial inclusion and make remittances cheaper, she said, noting that the average cost of money transfers stands at 6.3% amounting to US$44-billion annually. 

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Georgieva stressed that CBDCs should be backed by assets and added that cryptocurrencies are an investment opportunity when backed by assets, but when they are not they are “speculative

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry