IMF working on a new central bank platform for digital currencies

At a conference with African central banks in Rabat, Morocco, International Monetary Fund Managing Director (IMF) Kristalina Georgieva announced the organisation’s plan to develop a platform for central bank digital currencies (CDBCs).

As addressed in a policy paper in April, CBDCs, according to the director, should transcend national boundaries and not remain fragmented proposals within specific countries. She stated that the IMF works on a single regulatory framework to enable seamless worldwide interoperability for CBDCs.

This development would make cross-border transactions cheaper, more efficient and practical through shared norms and a common regulatory framework. She pointed out that 114 central banks are already working on CBDC initiatives, with 10 of them ‘crossing the finish line’.

Georgieva also highlighted the importance of a good guiding blueprint since ‘if poorly designed, CBDCs could also lead to financial stability risks, data privacy and legal challenges, financial integrity and cyber risks, and central bank operational risks.’ The possible void that would result from a lapse in harmonised legislation would probably be filled by cryptocurrencies, which typically function in a decentralised manner.

This development follows other international CBDC initiatives, such as the EU’s digital euro, which has reportedly faced some policy challenges, from privacy to timeline issues.