The International Monetary Fund has unveiled plans to create a global platform for the implementation of <a href="https://www.thenationalnews.com/business/money/2023/03/26/central-bank-digital-currencies-will-lower-remittance-costs-moodys-says/" target="_blank">central bank digital currencies</a>, or CBDCs, but cautioned that if not designed well, they could cause considerable risks for the financial system and economies. The Washington-based fund recognised the benefits of having a standardised CBDC platform that would help bridge the financial gap, IMF managing director Kristalina Georgieva said in prepared remarks for an African central banks conference in Rabat, Morocco. “CBDCs could help to increase inclusion by giving more people access to financial services, and at a lower cost, strengthen the resilience and efficiency of payment systems and make cross-border payments and remittances cheaper and quicker,” she said. “However, if poorly designed, CBDCs could also lead to financial stability risks, data privacy and legal challenges, financial integrity and cyber risks, and central bank operational risks.” At the conference, Ms Georgieva called for a united front in the platform's development, owing to the fund's mandate of ensuring that digital money fosters domestic and international economic and financial stability. “CBDCs should not be fragmented national propositions … to have more efficient and fairer transactions we need systems that connect countries; we need interoperability,” she said. “For this reason at the IMF, we are working on the concept of a global CBDC platform.” A CBDC is a digital form of a government-issued<a href="https://www.investopedia.com/terms/f/fiatmoney.asp"> currency</a>. They are similar to cryptocurrencies except that their value is fixed by the monetary authority and equal to the country's fiat currency. CBDCs are expected to provide some middle ground for the highly volatile cryptocurrency market. They reduce the risks associated with using cryptocurrency and provide a stable means of exchanging digital assets. Ms Georgieva's comments are in line with a recent report from Moody's Investors Service, which said CBDCs can lower costs for <a href="https://www.thenationalnews.com/business/money/2023/03/23/remittances-to-rise-in-the-middle-east-amid-inflationary-challenges/">those sending remittances</a> and reduce <a href="https://www.thenationalnews.com/business/banking/jp-morgan-chase-to-create-digital-coin-for-faster-transactions-1.826526">settlement and counterparty risks </a>for banks in cross-border transactions. Several governments and central banks have taken steps to create frameworks for the implementation of CBDCs into their economies: as of December 2022, 114 countries are in various stages of the endeavour, according to latest data from US think tank the Atlantic Council. Eleven of these countries – equivalent to about 10 per cent – have already enacted the use of CBDCs to date, according to the organisation's CBDC Tracker. The total figure tallies with the IMF's count, according to Ms Georgieva's speech in Rabat, but with only “about 10 already crossing the finish line”, she said. About 16 per cent of countries are in the pilot phase, while 30 per cent and 27 per cent are in the development and research stages, respectively, the Atlantic Council said. The think tank had also identified Australia, Brazil, Canada, China, India, Japan, Jordan, Kazakhstan, Laos, Montenegro, the Philippines, Russia, Saudi Arabia, Turkey, Ukraine, the UAE, the UK and the US as the countries that have made the “most progress” in CBDCs in 2023. “Our blueprint for a new class of platforms would enhance and ensure greater interoperability, efficiency and safety in cross-border payments, as well as in domestic financial markets,” Tobias Adrian, financial counsellor and director of the monetary and capital markets department of the IMF, said in Rabat. However, he cautioned that testing architectures and technology, especially on legal underpinnings and governance arrangements, “looks hard to implement”. “The IMF can help bolster trust in governance and oversight. It can leverage its convening power to build momentum around new ideas and evolve them in a direction consistent with the interests of member countries,” said Mr Adrian, who first presented the idea of a CBDC platform in September. The fund “can build on its policy expertise to suggest platform designs that support the continued stability of the international monetary system”, he said. The IMF's latest stance on CBDCs are a continuation of discussions that were held in Jeddah in September, Ms Georgieva said. She also said that the IMF has two coming papers on CBDCs “which will provide new analysis and learning” from the Middle East, Central Asia and Sub-Saharan Africa.