Investing.com - The International Monetary Fund (IMF) is looking to create more efficient and secure platforms for cross-border central bank digital currencies (CBDCs), while still allowing nations to maintain compliance checks and capital controls, according to Tobias Adrian, director of the IMF's monetary and capital markets department. Speaking in Rabat, Morocco, Adrian stated that these new platforms would improve the interoperability, efficiency, and safety of both cross-border payments and domestic financial markets.
Addressing the issues with current cross-border payment infrastructure such as costliness, slow processing times, and lack of transparency, Adrian proposed a single global CBDC platform that retains capital control capabilities. This idea was first introduced by him in September.
Earlier on Monday, Kristalina Georgieva - Managing Director at IMF - mentioned their efforts towards developing an international infrastructure enabling different CBDCs to work together seamlessly. The newly outlined system could facilitate programmed payments without requiring payees to share sensitive personal information with intermediaries while also preserving liquidity through collateral-backed contracts.
In contrast with blockchain-based validation systems like Bitcoin's proof-of-work or Ethereum's proof-of-stake technologies – which are criticized for energy consumption or high costs – this CBDC platform would be controlled by its operator using a single ledger system. This approach eliminates double spending risks by providing a unique description of ownership records.
Adrian emphasized that governments will retain authority over foreign currency transactions involving their citizens while enforcing anti-money laundering measures. The IMF aims not to compromise existing capital controls often imposed during financial crises situations.
Despite blockchain solutions offering easier cross-border payments as one key advantage over traditional methods, there remains strong competition against them since standard-setters are hesitant about undermining government regulations. Institutions like the Bank for International Settlements alongside private entities such as SWIFT are exploring state-backed CBDC alternatives.