- The International Monetary Fund (IMF) has revealed a new class of cross-border payment system, the XC platform, utilizing a single ledger to track CBDC transactions for enhanced efficiency and reduced costs.
- The XC platform, designed on the model of CBDC infrastructure, doesn’t require the use of CBDCs and supports interoperability among assets and money tokenized by the private sector.
In a transformative stride towards revolutionizing cross-border transactions, the International Monetary Fund (IMF) has unveiled the blueprint of a new payment system: the XC platform. Conceived as a ‘new class’ of cross-border payment, the XC platform is constructed to utilize a single ledger to record central bank digital currency (CBDC) transactions, integrating programmability and superior information management.
This revolutionary concept was presented during a roundtable on CBDC policy, held collaboratively with the central bank of Morocco on June 19. Tobias Adrian, the IMF’s director of the monetary and capital markets department, illuminated the potential benefits of this innovative platform for both individuals and institutional users, offering lower fees and expedited transaction times. This could provide significant savings, redirecting some of the $45 billion typically paid to remittance providers back to the pockets of individuals.
The XC platform also promises advantages for central banks, facilitating intervention in foreign exchange markets, aggregating data on capital flows, and resolving disputes. It also holds potential for domestic adaptation, capable of serving both wholesale and retail CBDCs.
Termed as the XC (cross-border payment and contracting) platform, it boasts a trusted single ledger to exchange standardized digital representations of central bank reserves in any currency. Following the blueprint of CBDC infrastructure, it encompasses a settlement layer with an expanded single ledger. Traditionally, institutions necessitate a reserve account with a central bank for cross-border operations; however, the XC platform simplifies this process by allowing the trading of tokenized domestic central bank reserves. Yet, the liquidity would still originate from institutions with reserve accounts.
An additional layer of programmability introduces opportunities for innovation and customization of services, while the information layer secures Anti-Money Laundering (AML) details required for trust conditions and privacy protections. It’s noteworthy that the XC platform doesn’t require CBDCs, and promotes interoperability among assets and money tokenized by the private sector, providing a safe environment to program financial contracts, with settlements in central bank money. Similar notions have been proposed by Agustín Carstens, the general manager of the Bank for International Settlements, indicating a growing momentum in this direction.