IMF Announces They Are Working On ‘A New Vision’ For A Single Global Digital Currency In Push To Eliminate Cash

The International Monetary Fund (IMF) has announced they are working on a new global central bank digital currency (CBDC), to ultimately transition away from the paper cash system in what they are referring to as “a new vision.”

At a conference in Rabat, Morocco on Monday, officials at the IMF said they want central banks to reach an agreement for a common regulatory framework for cross-border CBDC payments, unlocking digital interoperability. If not established, the group believes that this will create a void taken over by decentralized cryptocurrencies.

In a written speech published after she engaged in open dialogue with Governor of Bank Al Maghrib Abdellatif Jouahri and others in a panel discussion, IMF chief Kristalina Georgieva explained that their conversations stemmed around the implementation of CBDCs, and the IMF’s broader initiative they call the “High-level Policy Roundtable on Central Bank Digital Currencies: The Role of the Public Sector in Money and Payments – A New Vision.”

According to her, the panel “agreed on the need to continue dialogue on CBDCs and to gather and share knowledge and information for the benefit of our member countries in Africa, the Middle East, and beyond.”

During these talks she listed the benefits of CBDCs, such as increased “inclusion” by broadening access to financial services at lower costs, along with establishing cross-border payments “and remittances [that are] cheaper and quicker,” she said. However she also noted the risks if a CBDC is poorly designed, leading to things like economic instability, privacy issues, cyber attacks and hacks, and other operational risks. Notwithstanding the IMF chief said “CBDCs could reduce the number of intermediaries in cross-border payments, foster competition and enhance transparency.”

These are important considerations for the IMF, as we have a mandate to help ensure that digital money, including CBDCs, fosters domestic and international economic and financial stability.

Georgieva said

SEE: European Union Passes Law To Restrict Cash Transactions And Crypto Transfers Of €1000, As Bloc Plans To Soon Release CBDC

Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department at the IMF, also weighed-in in a prepared speech at the forum, where he discussed the “opportunity for money to evolve.” He noted that besides the IMF, the World Bank, the Bank of International Settlements (BIS), and the Russian-controlled Federal Security Service (FSB) are “tightly collaborating” to advance this venture.

Speaking on the CBDCs and this new cross-border system, Adrian stated:

This will bring people together through faster and cheaper payments, and countries together through a more stable and cohesive international monetary system.

It’s about technology, but it’s also about governance, which establishes the “rules of the game.”

These are tricky to establish, but an organization such as the IMF with its wide membership, focus on macro-financial interactions, and well-oiled internal governance can help countries build consensus.

To get global finance right, we must come together to get global payments right.

He went on to describe “the vision” “for a trusted ledger,” that basically is “an electronic document representing property rights on which digital versions of central bank reserves in any currency can be traded among participants,” he said, and that it cannot “exist in a vacuum;” for which “only those who need it can see it.”

Adrian provided more insight in how this system would operate:

The platform would settle money denominated in many different currencies. […] To make these interchangeable, we propose creating unique and standardized digital representations of them on the platform.

To make a payment, participating banks would deposit their domestic central bank reserves in an escrow account controlled by the platform operator, and in return obtain a digital version to trade on the platform.

In the case of the Moroccan ceramics exporter, its bank would receive tokenized reserves from the Spanish customer’s bank. The exporter’s bank would credit the exporter’s account, but may not be terribly happy holding euro reserves. So it could sell them to another participant on the platform in exchange for domestic reserves.

Settlement would be quick, final, and safe. The ledger would be controlled by the platform operator, and only this operator would settle transactions. The single ledger would ensure there is a unique description of who owns what, so no double spending can occur.

He later stated: “As money, CBDCs provide safety. As infrastructure, CBDCs bring interoperability and efficiency among private networks for digital money and assets.”

SEE: New Poll Shows Almost Three-Quarters Of Americans Have Never Heard Of A CBDC

As noted earlier, other international financial bodies are working on creating new CBDC systems. In November of last year BIS completed their first successful cross-border CBDC transaction; and earlier this year they launched their “Project Icebreaker” to further facilitate and rollout a cross-border CBDC platform.

In April the Digital Currency Monetary Authority jointly launched what they call “Unicoin” with the IMF, which would facilitate a central hub that will allow nations to convert their CBDCs into a single one to better facilitate international commerce.