IMF, World Bank stress benefits of central bank digital currencies
Around 90 per cent of the world’s central banks are currently looking at creating digital versions of their currencies.
The International Monetary Fund, the World Bank and the Bank for International Settlements have made a joint call for global cooperation on central bank digital currencies, advocating for their cross-border benefits. In a statement, the three global institutions argued that coordination on digital currencies would shake up the status quo of having to rely on expensive and slow transfer services to send money around the world.
“Faster, cheaper, more transparent and more inclusive cross-border payment services would deliver benefits for citizens, businesses, and economies worldwide,” said Indermit Gill, World Bank Group vice president of equitable growth, finance and institutions.
Around 90 per cent of the world’s central banks are currently looking at creating digital versions of their currencies, raising questions about how they will work and operate with each other.
“CBDCs (central bank digital currencies) offer the opportunity to start with a ‘clean slate’. It is crucially important that central banks take the cross-border dimension into account,” Jon Cunliffe, chair of the Committee on Payments and Market Infrastructures and deputy governor for Financial Stability of the Bank of England, said in a report prepared for the G20 meeting in Italy.
“The implications of CBDCs, even if only intended for domestic use, will go beyond borders,” added Tobias Adrian, Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department.
The report said that facilitating international payments with CBDCs could be achieved through different degrees of integration and cooperation, ranging from basic compatibility with common standards to the establishment of international payment infrastructures.
The IMF, World Bank, and BIS prepared the report for a G20 meeting in Italy hosting the finance ministers and central bankers of the world’s largest economies.
The report envisions a central bank digital currency ecosystem where currencies could be exchanged with one another instantly and at all times. In the same way that central banks offer swapline to one another (to ensure, for example, that US dollars are readily available for exchange), digital currencies could offer the same services to retail users. According to the report, by the end of 2022 the G20 members, the IMF, the World Bank and the BIS will have completed regulatory stablecoin frameworks and research and selection of CBDC designs, technologies and experiments.
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