Thank you for joining us here today for this virtual workshop about how digital money can facilitate remittances.
The eminent MIT economist Rudy Dornbusch famously said:
“In economics things take longer to happen than you think they will, and then they happen faster than you thought they could.”
Digital money is a perfect illustration of this maxim, where after a long period of development, the field is on the cusp of major changes that have the potential to reshape cross-border payments and remittances.
For example, 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.
We are witnessing a revolution in digital money that could make remittances easier, faster, and cheaper.
One of the key messages from our Spring meetings has been the danger we face from growing divergences across countries: Divergences in access to vaccines, in recoveries from the pandemic, and in access to a digital future.
Remittances have always played a key role in improving the lives of people in developing economies, and supporting economic activity. As we look for ways to address the challenges of economic divergences across countries, we need to use every tool we can to support those most affected by the pandemic. And with the risk of a growing digital divide between rich and poor countries, we must also ensure that all countries can benefit from the latest innovations in digital money and payments, particularly remittances.
Efforts are underway to improve cross-border payment systems under the Financial Stability Board’s 2020 roadmap. New forms of digital money could provide a parallel boost to the vital lifelines that remittances provide to the poor and to developing economies. Within the right framework, peer-to-peer transfers of central bank digital currencies or privately issued stablecoins could lead to shorter payment chains, faster transactions, and more competition among remittance providers.
The biggest beneficiaries would be vulnerable people sending small value remittances: those most at risk from being left behind by the pandemic.
With such digital disruption, however, also comes risk. We can address the risks posed by digital money by focusing our efforts in three areas.
First, new forms of money must remain trustworthy. They must protect consumers, be safe and anchored in sound legal frameworks, and support financial integrity.
Second, domestic economic and financial stability must be protected by carefully designed public-private partnerships that underpin the provision of digital money, including fair competition.
Third, frameworks should be geared toward ensuring 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.
With our mandate to safeguard monetary and financial stability, the IMF has an important role to play in supporting our members to deliver on these priorities, and we are ramping up our capacity.
In doing so, we will continue our close collaboration with key stakeholders—including the Financial Stability Board, the Bank for International Settlements, the World Bank and industry players like those here today—and each must leverage its comparative advantages.
For the IMF that includes using our expertise and experience in surveillance, capacity development, and policy development. And our near-universal membership means we can act as a transmission line of learning and best practice across economies of all sizes.
We are grateful that you could join us here today for this important workshop, and hear your perspectives as industry participants and policymakers.
I wish you a productive set of discussions and look forward to hearing the outcome.
Opening Remarks at iLab Spring Meetings Virtual Workshop by Kristalina Georgieva, IMF Managing Director