IMF Working On Global Central Bank Digital Currency Platform

The International Monetary Fund Managing Director Kristalina Georgieva stated on Monday, 19 June, that IMF is working on a platform to enable transactions between countries through central bank digital currencies (CBDCs). CBDCs are digital currencies issued by central banks to support financial services for a nation's government.

She added that for safe and secure global interoperability, central banks of different countries must develop a common regulatory framework for digital currencies. IMF believes regulation and careful supervision are fundamental to anchoring trust in new digital forms of money. It is a novel step toward a digitalized world.

IMF sees CBDCs as having a lot more potential to change the nature of transactions, but if countries fail to agree on a common platform, then we might not be utilizing it to its fullest. As per the reports by Reuters, cryptocurrencies are nearly always decentralized, therefore, would quickly fill up the space of digital currency.

"CBDCs should not be fragmented national propositions ... to have more efficient and fairer transactions, we need systems that connect countries; we need interoperability," she explains as reported by Reuters.

CBDC & Cryptocurrency

It is crucial to make a clear distinction between CBDCs and cryptocurrencies. Cryptocurrency is a digital asset used for exchange transactions without the involvement of third parties like any financial institution. On the other hand, CBDCs are linked to the country's central bank, which makes it uncertain. It might affect consumer spending, investment, the financial services industry, interest rates, bank reserves, or the economy as a whole.

However, cryptocurrencies are highly volatile and a bad option for daily transactions. CBDCs give a sense of security to an individual and have attracted the interest of millions across India. Although both share the same quality of 'digital' but both have different meanings and utilization.

Kristalina Georgieva's speech in Rabat also revealed about 10 countries have already "crossed the finish line." While 16% of the countries are in the pilot phase, more countries are gradually becoming part of this common platform of CBDC.

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