IMF plans on developing a global CBDC platform, to enable transactions between nations

The International Monetary Fund (IMF), in an attempt to develop a more accessible global monetary system, has announced working on a global platform that will enhance CBDC interoperability.

On Monday, Kristalina Georgieva, IMF Managing Director’s announced that the agency is “working hard" on creating a global infrastructure to enable different CBDCs issued by national central banks to work with each other. "If countries develop CBDCs only for domestic deployment we are underutilising their capacity," she added.

.@KGeorgieva participated in the High-level Policy Roundtable on Central Bank Digital Currencies in Rabat 🇲🇦.

Read her press statement on the importance of collaboration across institutions for realizing CBDC benefits & payment system interoperability: https://t.co/8L3E3LK119 pic.twitter.com/8jGqpJPwU4

— IMF (@IMFNews) June 19, 2023

Georgieva further stated, “We are working on a principle of interoperability.” She mentioned, “ Such a concept would involve a shared infrastructure that would avoid the emergence of “settlement blocks,” which is the “last thing we want” to avoid further economic fragmentation.”

Know the structure of the proposed CBDC platform

The financial counselor and director of the Monetary and Capital Markets Department of the IMF, Tobias Adrian, emphasised that technologies like cryptography and tokenisation are being utilised worldwide to improve money systems and hence, should be developed further.

A blueprint called the XC platforms for a new class of cross-border and domestic payment and contracting platforms has been shared by Adrian. “Our blueprint for a new class of platforms would (ensure) greater interoperability, efficiency, and safety in cross-border payments, as well as in domestic financial markets,” says Adrian.

The proposed CBDC platform would possess three layers, namely, settlement, programming, and information management. The platform would offer interoperability among fiat currencies and “legacy systems” and would be based on transparent, rule-based governance.

Further, the said platform would also focus on minimising delays and high fees associated with international payments.

Several nations adopting CBDCs

Owing to decreasing cash usage and increasing interest in cryptocurrencies, numerous central banks and monetary policy institutions are exploring the feasibility of central bank digital currencies. I

As the global CBDC race is hotting up, countries like India, China, and Hong Kong have already launched their pilot CBDC programmes. Nations like Russia, Japan, and Ukraine have plans to launch their pilot programmes before the end of the year.