The XC Platform: Utilizing Tokenized Assets for Domestic Operations, with or without CBDCs
IMF Outlines “New Class” of Cross-Border Payment System, Combining CBDC Transactions and Enhanced Information Management without Requiring a Single Ledger.
During a roundtable on CBDC policy, IMF officials unveiled their new platform concept on June 19, in collaboration with the central bank of Morocco. Tobias Adrian, the IMF’s director of the monetary and capital markets department, highlighted the potential advantages of the platform, including reduced fees and faster transactions, which would benefit both individual and institutional users.
Adrian further emphasized that a portion of the $45 billion paid annually to remittance providers could be redirected towards helping the economically disadvantaged.
Furthermore, according to Adrian, the platform would facilitate central banks in intervening in foreign exchange (FX) markets, consolidating information on capital flows, and resolving disputes. He further noted that the platform could be modified to accommodate domestic wholesale and retail central bank digital currencies (CBDCs).
“XC platforms provide a reliable single ledger, serving as a document that represents property rights, enabling the exchange of standardized digital representations of central bank reserves in any currency.”
The XC platform was developed based on the CBDC infrastructure framework, featuring a settlement layer with a single ledger. The platform aims to broaden access, as currently institutions require a reserve account with a central bank for cross-border operations.
With the XC platform, tokenized domestic central bank reserves can be traded, while liquidity would continue to originate from institutions holding reserve accounts.
Within the XC platform, a programming layer would be available to foster innovation and enable customization of services. Additionally, an information layer would house essential anti-money laundering (AML) information to fulfill trust requirements and uphold privacy safeguards.
Merci beaucoup cher gouverneur Jouahri for your warm hospitality & for co-hosting this CBDC conference w/ the IMF.
— Kristalina Georgieva (@KGeorgieva) June 19, 2023
The XC platform is designed to operate without mandatory adoption of central bank digital currencies (CBDCs). Instead, it offers interoperability between assets and privately tokenized money, providing a standardized and secure environment for programming financial contracts. Settlement within the platform would be conducted using central bank money.
This concept aligns with a similar proposal made by Agustín Carstens, the general manager of the Bank for International Settlements, in a speech delivered in February, as highlighted by the publication.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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