IMF calls for new payments system to accommodate central bank digital currencies
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) called for the development of new public infrastructure to connect various payment systems, including digital currencies.
She added that countries must work together to build new “roads, railways, bridges and tunnels” – using public digital platforms to connect payment systems.
Georgieva said so in a report published on the IMF’s website, titled “Dealing with Fragmentation: How to Modernize the International Payments System”.
According to her, the new payment system would help counter the fragmentation of the international monetary system.
“It would be a new way to connect people, markets and economies in the digital world,” she said.
She said it would make international payments more efficient, safer and more inclusive.
“Essentially, it would reduce the risk of fragmentation,” she added.
“It’s a tall order, but not insurmountable. Climbing this mountain is worth it.
“And for that, our Swiss friends can be our guides again – with their history of cooperation and, literally, their mountaineering expertise.”
The IMF said the world must think like a mountaineer by using state-of-the-art equipment, adapting to existing terrain and “building on our team”.
The Bretton Woods institution said the platform is to connect various forms of money that countries will legally use and support.
“This includes commercial bank deposits, but potentially also central bank digital currencies, and even some stablecoin deals – if well designed and regulated,” he said.
“Such a platform is particularly important for economies with less advanced payment systems. By adopting various forms of currency, we can make payments work for everyone, in every country.
Furthermore, the IMF added that as payments become more efficient, capital flows will also continue to evolve.
“We could see an overall increase in entries. This could spur productive investment and integrate markets – and we could see more flows to low-income countries or sectors that have benefited less in the past,” he said.
Additionally, the IMF said countries must rely on each other to modernize the international payment system and reduce fragmentation.
“When it comes to governance, countries will ultimately decide,” he said.
“However, international organizations – such as the IMF, the Bank for International Settlements and the Financial Stability Board – can play an important role. We can suggest concrete solutions, foster consensus and bring together not only policy makers, but also the voices of private business and civil society. »