IMF Developing Global CBDC Interoperability to Avoid Settlement Blocks21. June 2023
• The International Monetary Fund is working hard on a concept of global infrastructure for interoperability between digital currencies that are issued by national central banks.
• 11 countries have launched a central bank digital currency and all G7 economies have moved into the development stage of a CBDC.
• US Treasury official Graham Steele said there are privacy challenges to creating a retail CBDC, and Florida Governor Ron DeSantis signed a bill banning CBDCs last month.
International Monetary Fund Working on Global Infrastructure
The International Monetary Fund (IMF) is striving to make sure there is interoperability between digital currencies that are issued by different countries’ central banks in order to avoid economic fragmentation. Managing Director Kristalina Georgieva said the agency is “working hard on a concept of global infrastructure” to ensure this.
Central Bank Digital Currencies Around the World
Currently, 11 countries have already launched their own central bank digital currency (CBDC), while all G7 economies have moved into the development stage of their own CBDC. In fact, 114 countries, representing over 95 percent of global gross domestic product, are now exploring the idea of launching one – up from only 35 countries in May 2020.
Pros and Cons of Retail CBDCs
Advocates for CBDCs say they can provide better financial services to citizens, while critics warn that they could violate privacy. Graham Steele, assistant secretary for financial institutions at US Treasury discussed some pros and cons to creating a retail version at the Transform Payments US 2023 Conference in Texas – namely privacy concerns.
Ron DeSantis Opposes US Federal Reserve Issuing CBDC
Florida Governor Ron DeSantis has opposed any attempt by the US Federal Reserve to issue its own CBDC due to privacy fears and signed legislation last month banning them from being created within his state’s borders. His opposition was echoed by Republican Senator Ted Cruz who introduced a bill in March 2022 which would ban the Fed from developing their own direct-to-consumer version of it as well.
It remains uncertain whether or not any kind of direct-to-consumer form of digital currency will be adopted on an international level due both its potential benefits and threats it poses when it comes to personal data security and privacy concerns.