•The International Monetary Fund (IMF) has presented the outlines of a “new class” of cross-border payments system, called the XC platform.
•The platform would use a single ledger to record CBDC transactions and be programmable for improved information management.
•The XC platform could benefit users through lower fees and faster transaction times, while also helping central banks intervene in foreign exchange markets, aggregate capital flows, and resolve disputes.
International Monetary Fund Introduces New Platform
The International Monetary Fund (IMF) has unveiled plans for a new payment system that could revolutionize global transactions. The XC (cross-border payment and contracting) platform is designed to reduce transaction costs and speed up processing times by using a single ledger to record central bank digital currency (CBDC) transactions. This would create an efficient way of exchanging tokenized domestic reserves.
Benefits to Users
Tobias Adrian, director of the IMF’s monetary and capital markets department, stated that individuals and institutions would reap several benefits from this new platform. These include lower fees and faster transaction times which can put money back into the pockets of those who are currently paying remittance providers around $45 billion annually. It could also help central banks intervene in foreign exchange markets as well as aggregate data on capital flows and settle disputes quickly.
A programming layer will also be included in order to enable innovation and customization of services on the XC platform. In addition, an information layer containing anti-money laundering details will ensure trust conditions are met while maintaining privacy protections for users as well.
Adaptability with Domestic CBDCs
XC platforms have been designed with adaptability in mind when it comes to domestic wholesale or retail CBDCs as well. However, liquidity will still need to come from institutions that hold reserve accounts with central banks if they wish to carry out cross-border operations successfully on this new platform.
Overall, IMF’s introduction of the XC payment system sets out a framework that could bring about significant improvements for global financial systems by lowering costs associated with international transfers while increasing efficiency across all levels of transactions involving digital currencies such as CBDCs.