IMF Developing Global CBDC System to Facilitate Seamless Cross-Border Transactions

IMF to Create Global CBDC System for Cross-Border Transactions

  • The International Monetary Fund (IMF) is working on a global central bank digital currency (CBDC) system to facilitate seamless cross-border transactions.
  • Over 100 countries are exploring a CBDC, while 11 countries have fully launched a CBDC.
  • The IMF strongly believes that central banks must build their own digital currencies in order to fight the danger of cryptocurrencies.

Central Banks Prioritize Interoperability

The IMF has been encouraging different CBDC initiatives from central banks across the world. Most initiatives however, are primarily concerned with developing digital versions of national fiat currencies. To create a standard regulatory framework for digital currencies and enable global interoperability, Georgieva stressed that central banks must prioritize this component.

Cryptocurrencies without Assets Backing them Not Safe

According to Georgieva, only cryptocurrencies backed by assets can be deemed safe as they are more of a “speculative investment” than other types. This means that only stablecoins can be considered safe investments at this time.

114 Countries Exploring a CBDC

The Atlantic Council has been tracking the status of CBDC projects across the globe and found that 114 countries representing over 95% of global GDP are exploring one. Moreover, 11 countries have already fully launched their own version of a digital currency while 20 others will take significant steps towards piloting one in 2023. China’s pilot program which reaches 260 million people is expected to expand to most parts of the country soon.

Cross-Border Tests Taking Place

At present there are nine cross-border wholesale CBDC tests and seven cross-border retail tests being conducted around the world. The IMF is hoping its initiative will help facilitate these kinds of test even further in the future.