Leveraging Digital Money to Facilitate Remittances
IMF News, April 14, 2021
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- Authors: Kristalina Georgieva
- Published: April 14, 2021
Context and opening
- Opening remarks at iLab Spring Meetings Virtual Workshop by Kristalina Georgieva, IMF Managing Director.
- Location and date: Washington, DC; April 14, 2021.
- Media relations contact: PRESS OFFICER: Phone: +1 202 623-7100 Email: MEDIA@IMF.org @IMFSpokesperson
Digital money: state and potential
- After a long period of development, digital money is now on the cusp of major changes that could reshape cross-border payments and remittances.
- Examples cited:
- "Last October The Bahamas launched the Sand Dollar, the world’s first central bank digital currency."
- "Many other economies are exploring their own pilot programs."
- "Other forms of digital money, such as privately issued stablecoins, are increasingly being used for cross-border payments."
- Potential benefits:
- Make remittances easier, faster, and cheaper.
- Shorter payment chains and faster transactions through peer-to-peer transfers of central bank digital currencies or privately issued stablecoins.
- More competition among remittance providers.
- Primary beneficiaries:
- Vulnerable people sending small value remittances: "those most at risk from being left behind by the pandemic."
Risks and three priority areas for action
- Digital disruption brings risks that must be addressed by focusing efforts in three areas:
- Trustworthiness:
- New forms of money must remain trustworthy.
- Must protect consumers, be safe and anchored in sound legal frameworks, and support financial integrity.
- Domestic stability and public-private partnerships:
- "Domestic economic and financial stability must be protected by carefully designed public-private partnerships that underpin the provision of digital money, including fair competition."
- International monetary system and integration:
- Frameworks should ensure the international monetary system remains stable and efficient.
- Countries need to maintain control over monetary policy, financial conditions, capital account openness, and foreign exchange regimes.
- Payment systems must grow increasingly integrated and must work for all countries to avoid a digital divide.
- "Reserve currency configurations and backstops must evolve smoothly."
Policy roles and IMF contribution
- The IMF’s mandate: safeguard monetary and financial stability.
- IMF role and tools:
- Support members to deliver on priorities through ramped-up capacity.
- Leverage expertise and experience in surveillance, capacity development, and policy development.
- Use near-universal membership to act as a transmission line of learning and best practice across economies of all sizes.
- Collaboration:
- Continue close collaboration with key stakeholders, including the Financial Stability Board, the Bank for International Settlements, the World Bank, and industry players.
- Each stakeholder should leverage its comparative advantages.
Cross-cutting themes and priorities reiterated
- Addressing growing divergences across countries is critical: divergences in access to vaccines, in recoveries from the pandemic, and in access to a digital future.
- Ensuring all countries can benefit from innovations in digital money and payments to prevent a growing digital divide.
- Emphasis on using every tool to support those most affected by the pandemic and protect vulnerable remittance senders and recipients.
Opening Remarks at iLab Spring Meetings Virtual Workshop by Kristalina Georgieva, Washington, DC, April 14, 2021 — IMF Communications Department