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The International Monetary Fund (IMF) has made a groundbreaking announcement, unveiling the blueprint for the XC (Cross-Border Payment and Contracting) platform—a revolutionary system for cross-border transactions. This significant development was disclosed during a recent roundtable discussion on central bank digital currency (CBDC) policy, jointly hosted with Morocco's central bank.
The architecture of XC mirrors the existing CBDC infrastructure but sets itself apart with its single, trusted ledger—a game-changing mechanism in the financial world. This ledger enables the exchange of standardized digital representations of central bank reserves across currencies. Currently, only institutions with reserve accounts at central banks can facilitate cross-border operations. However, XC aims to eliminate this constraint by facilitating trades involving tokenized domestic central bank reserves.
Tobias Adrian, the IMF's Director of the Monetary and Capital Markets Department, emphasizes the numerous benefits of XC. The system promises faster transactions, reduced costs, and improved information management, relieving financial burdens for both individuals and institutions. With the introduction of XC, the estimated $45 billion paid annually to remittance providers may find its way back to economically disadvantaged communities.
Adrian highlights additional features of the XC platform, such as its versatility in assisting central banks' interventions in foreign exchange markets, streamlining capital flow information, and facilitating dispute resolution. XC's adaptability extends to domestic wholesale and retail CBDCs as well.
Notably, the use of the XC platform is not limited to CBDCs—it also enables seamless interaction among assets and tokenized money from the private sector. This creates a secure environment for programming financial contracts while upholding high standards.
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