The International Monetary Fund (IMF) has recently introduced a “new class” of cross-border payment platform that offers the potential for a single ledger to record central bank digital currency (CBDC) transactions, enhanced programmability, and superior information management. By revealing their new platform concept during a roundtable on CBDC policy, the IMF aims to lower transaction fees and accelerate transaction times for individual and institutional users. This could potentially save them $45 billion in remittance fees annually, putting more money back into the pockets of those in need.
The new payment platform, referred to as the XC (cross-border payment and contracting) platform, offers a trusted single ledger for exchanging standardized digital representations of central bank reserves in any currency. The XC platform has been designed using the model of CBDC infrastructure and can be adapted for domestic wholesale and retail CBDCs as well.
However, the XC platform does not require the use of CBDCs. It can provide interoperability among assets and money tokenized by the private sector, instilling standards and a safe environment for the programming of financial contracts. Settlement would still be carried out in central bank money, ensuring stability within the system.
The proposed payment platform poses several advantages for central banks, such as the potential for intervention in FX markets, the aggregation of information on capital flows, and dispute resolution. Additionally, it could allow for the trading of tokenized domestic central bank reserves, removing the need for institutions to have a reserve account with a central bank.
Despite these benefits, some skeptics argue that the use of a single ledger for tracking CBDC transactions may raise concerns over privacy and the potential for abuse by authoritarian regimes. Furthermore, the lack of a need for CBDCs within the XC platform could dampen enthusiasm for the technology, as it does not guarantee the widespread adoption of CBDCs by central banks and other financial institutions.
In conclusion, the IMF’s new XC platform presents an intriguing concept for cross-border payments and a potential boon to users who stand to benefit from lower transaction fees and faster processing times. However, with potential privacy concerns and skepticism around the necessity of CBDCs, it remains to be seen whether this new payment platform will gain widespread support and play a significant role in shaping the future of global financial transactions.
Source: Cointelegraph
