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The International Monetary Fund (IMF) is taking steps to ensure the smooth operation of Central Bank Digital Currency (CBDC) globally. Recognizing the need for global interoperability, The IMF is developing a platform that will connect CBDCs introduced by various governments around the world. What risks to individual finances might this new technology pose?
The aim is to prevent a functional void that could be filled by private market cryptocurrencies, as reported by Reuters on Monday.
The IMF Is Building a CBDC World
During a conference in Rabat, Morocco, IMF Managing Director Kristalina Georgieva emphasized the importance of an integrated approach to CBDCs.
Georgieva highlighted that CBDCs should not be limited to national borders but should be designed to facilitate efficient and fair transactions between countries. To achieve this, The IMF is actively working on concepts for a global CBDC platform.
He stressed that CBDCs must adhere to a framework in which they are backed by assets, similar to traditional fiat currencies. When designed this way, CBDCs offer more stability and reliability.
By ensuring global interoperability through the platform, the IMF aims to “take advantage of the potential benefits of CBDCs, such as promoting financial inclusion and reducing payment costs”. However, it is clear that behind this technology, the IMF is trying to control people’s finances more. Especially those who have found their way to financial freedom through cryptocurrencies, which cannot be controlled by international bodies. Georgieva’s words are just a “trojan horse” of what she is really looking for with a new platform.
However, to avoid fragmentation and maximize the potential of CBDCs, The International Monetary Fund is urging central banks to agree on a common regulatory framework for digital currencies. Georgieva warned that failing to build such a platform would create a void that decentralized cryptocurrencies could potentially fill.
The IMF’s initiatives are in line with increasing interest among central banks around the world, with around 114 banks exploring CBDC implementation, and around 10 close to completion.
Colombian CBDC Pilot Project
This development comes as Colombia’s central bank, Banco de la República, recently announced its intention to launch a pilot project to test the feasibility and benefits of CBDCs using Ripple’s XRP ledger.
This project aims to explore how CBDCs can increase financial inclusion, efficiency, and innovation in a country’s payment system. Selected financial institutions, payment service providers and technology companies will participate, leverages Ripple’s XRP as a bridging currency to facilitate cross-border transactions and settlements.
Bank of England “Britcoins”.
The Bank of England (BoE) is also developing its CBDC, which is known as “Britcoin.” Following the successful conclusion of the Rosalind Project, a pilot study conducted in collaboration with the Bank for International Settlements, the BoE is getting closer to realizing its vision.
This study explores the application programming interface (API) prototype implementation in retail CBDC transactions. Further findings show that CBDCs have the potential to increase payment efficiency, reduce costs, and enable the creation of innovative financial products.
While Central Bank Digital Currency (CBDC) continues to gain momentum and attract widespread attention, its effectiveness must be critically questioned. CBDCs, which are controlled by a central bank, may not offer the same level of decentralization and privacy as native cryptocurrencies. Digital assets, such as Bitcoin or Ethereum, provide greater financial autonomy, security and potential for innovation.
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