The IMF launches a digital currency for use by banks around the planet

The IMF launches a digital currency
Key facts:
  • The CBDC is described as the Universal Currency Unit or UMU for cross-border transactions.
  • The digital currency is usable by the 11,000 banks that make up the SWIFT system.

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The Digital Currency Monetary Authority (DCMA), an agency under the International Monetary Fund (IMF), today announced the launch of a central bank digital currency (CBDC) for use by all financial institutions on the planet.

The launch was made official during the spring meeting between the IMF and the World Bank, until April 16 in Washington, the capital of the United States.

In a press release, the DCMA describes its proposal as the Universal Monetary Unit (UMU) or Unicoin, created to “carry out transactions in any legal tender.” 

The note adds that it “functions as a CBDC to enforce banking regulations and protect the financial integrity of the international banking system.”

To use it, banks integrated into the SWIFT interbank payment system will be able to attach codes and bank accounts to the UMU digital wallet, and from there, carry out cross-border transactions.

It means that the system is available to the more than 11,000 financial institutions that make up the SWIFT system, in more than 200 countries.

By using UMU, banks would be circumventing “the correspondent banking system at wholesale exchange rates.” Therefore, the transfers are made “at a lower cost and with instant settlement in real-time,” the statement added.

The DCMA notes that UMU adopts “a globally located public money system architecture” and can be configured to comply with “the central bank regulations of each participating jurisdiction.”

The IMF modernizes the banking system by winking at the bitcoin

UMU’s launch comes 14 years after Bitcoin made banks obsolete by allowing fast, instant, and low-cost international transactions; characteristics with which the DCMA launches a strong nod to the invention of Satoshi Nakamoto.

However, the so-called monetary authority distances itself from the first of the cryptocurrencies by clarifying that UMU complies with the recent crypto asset policy recommendations, proposed by the IMF.

Among the nine points included in the plan on how countries should regulate cryptocurrencies stands out the kind of plea not to grant crypto assets like Bitcoin the status of legal tender, as El Salvador did.

As reported by Market Times, the IMF has strongly criticized El Salvador on several occasions, since the Central American country became the first in the world to adopt Bitcoin as a legal tender.