The International Monetary Fund (IMF) is set to launch a Central Bank Digital Currencies (CBDCs) platform that will facilitate cross-border settlements. CBDCs are one of the few forms of digital assets that have gained attention globally, with many central banks and governments choosing it over Bitcoin (BTC) and even the United States dollar.
Interoperability Influences IMF Decision
The global interest in CBDCs has caused the introduction of many projects looking into its implementation, including the newly launched Ripple CBDC Platform.
Speaking at a conference attended by African central bank leaders in Rabat, Morocco, IMF Managing Director Kristalina Georgieva said, “CBDCs should not be fragmented national propositions… To have more efficient and fairer transactions we need systems that connect countries: we need interoperability.”
She explained that this need for interoperability, translated to the decision to roll out a CBDC platform.
International Agency Pushes for Global Crypto Framework
The IMF discovered a growing trend amongst nations for the implementation of a CBDC. Simultaneously, the financial agency is trying to set the pace for central banks to approve a common regulatory framework for digital assets across several regions as this will promote global interoperability. If not, a vacuum will be created which can only be filled by cryptocurrencies which are often decentralized, according to Georgieva.
She opined that if CBDCs are launched merely for their domestic use, it would be an underutilization of their capacity.
National cryptocurrencies promote financial inclusion and make remittances cheaper. From the IMF Managing Director’s record, about 114 central banks have begun their CBDC implementation process. Some are still in their research phase while others have progressed to the pilot testing phase.
CBDCs Needs to be Backed by Assets
Moving forward, Georgieva emphasized the need for CBDCs to be backed by assets which would then make them investment opportunities.
She cited that if they are not, they remain “speculative assets” like other cryptocurrencies that have sparked concerns amongst netizens. Crypto assets like BTC are oftentimes regarded as speculative assets which hold no underlying value because they are not backed by any assets.
Hence, crypto community members as well as the government of many countries are more inured towards adopting stablecoins which are usually backed by a fiat currency. Even Chairman Rostin Behnam, Head of the Commodity Futures Trading Commission (CFTC) believes that stablecoins should be classified as commodities.