The latest news revealed that the International Monetary Fund (IMF) is set to create a global interoperable platform to enhance the utility cases of Central bank digital currencies, CBDCs.
According to the report, the IMF is developing an international platform that would ensure the interoperability of various digital currencies owned by different nations of the world. The agency reportedly believed that the widespread consensus that the proposed platform would provide would be necessary to avoid private cryptocurrencies from taking its place.
Kristalina Georgieva, the director of IMF, recently stated that the agency aims to launch the proposed platform to facilitate CBDC transactions amongst nations. She added that to ensure more transparent and efficient transactions, there is a need for a unified system that would connect CBDCs of different countries and allow them to interoperate.
Also, she highlighted that digital currencies across different nations should offer similar services. To actualize this, Georgieva stated that the IMF is dedicated to creating the proposed international CBDCs platform.
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Georgieva Proposed A Worldwide Interoperable CBDC Platform
A typical CBDC is a virtual currency that is designed by a central bank in the form of a fiat currency. It is usually backed by traditional currencies or gold. According to the report, some of the supposed merits of CBDCs are that they promote financial inclusion as well as reduce payment fees.
In addition, statistics revealed that the average remittance costs per year are valued at $44 billion which is about 6.3%.
Georgieva pointed out that any crypto asset that does not imitate the design of the CBDC is a speculative investment.
Additionally, she said countries that create CBDCs for domestic uses only are under-exploring the full potential of the digital currency.
Furthermore, the IMF director pointed out that there are about 114 nations across the globe that already have contact with the CBDCs to a significant extent while ten of them have already launched their use. Meanwhile, some countries such as Canada and the US are still contemplating whether to create one or if it is worth the effort.
IMF Wants Private Cryptocurrencies To Be Regulated
Even before the introduction of CBDCs, the financial market had recognized decentralized cryptocurrencies such as Bitcoin as a crucial financial tool that helps cut down cost charges significantly. Furthermore, in 2021, El Salvador legalized the use of Bitcoin within its territory alongside a state-backed Chivo wallet.
Although the International Monetary Fund was not in support of El Salvador’s action, but it could not interfere for fear that the nation’s economy would be greatly affected. Hence, Nayib Bukele, the El Salvador president continues to ignore the agency’s advice.
In addition, private stablecoins such as USDC and USDT have been subjects of constant scrutiny from regulators. The major reasons are the ability of the tokens to depeg its value and its highly risky reserves. Hence, the IMF suggested in its five-point regulation proposal it published earlier this year that local banks should regulate stablecoin providers.