FameEX Hot Topics | IMF Developing a Platform to Enhance Cross-Border Interoperability for CBDCs

The International Monetary Fund (IMF) is actively developing a platform to facilitate cross-border transactions and settlements using central bank digital currencies (CBDCs). This platform aims to establish interoperability among different countries, enabling efficient utilization of CBDCs beyond domestic boundaries. IMF Managing Director Kristalina Georgieva emphasized the significance of this initiative, highlighting the need for interconnected systems to promote fair and streamlined transactions.

Speaking at a conference in Morocco, Georgieva underscored the importance of CBDC interoperability, stating that CBDCs should not be limited to national domains. To enhance transaction efficiency and fairness, countries must establish systems that connect with one another, creating a seamless environment for cross-border payments. Georgieva also stressed the necessity for global CBDC regulations to support this interoperability objective. Failing to reach agreements in this regard may lead to the rise of cryptocurrencies as substitutes, thereby potentially disrupting the financial landscape.
Georgieva shared that currently, 114 central banks are engaged in exploring CBDC projects, with ten of them nearing completion. While some CBDCs are already in use, such as China's e-yuan, which is utilized for salary payments in specific regions, others face challenges, as seen with Venezuela's petro, a state-issued digital currency currently undergoing liquidation due to a cryptocurrency corruption probe. Additionally, the European Central Bank (ECB) is in the final stages of deliberation on the issuance of a digital euro, primarily focusing on providing payment infrastructure for European citizens.

Highlighting the potential benefits of CBDC adoption, Georgieva emphasized that implementing CBDCs can foster financial inclusion and enhance the resilience and efficiency of payment systems. Furthermore, CBDCs have the potential to reduce the cost of cross-border payments and remittances, which currently incur an average fee of 6.3%. This industry generates approximately $44 billion in revenue for service providers annually.

Georgieva clarified the distinction between cryptocurrency assets and CBDCs, expressing her belief that CBDCs should be backed by assets. She noted that asset-backed cryptocurrencies could be considered investment opportunities, while unbacked cryptocurrencies are viewed as speculative investments. These comments reflect her previous advocacy for regulatory measures surrounding cryptocurrencies.

As the IMF works diligently to develop the cross-border interoperability platform for CBDCs, their efforts align with the global trend toward exploring and implementing digital currencies. By fostering collaboration and establishing regulatory frameworks, the IMF aims to unlock the full potential of CBDCs in facilitating seamless cross-border transactions and contributing to a more inclusive and efficient global financial system.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.