AFP, Zurich :
IMF Managing Director Kristalina Georgieva called Tuesday for the modernisation of the cross-border payment system by using digital platforms, arguing that this would reduce the risk of a fragmented global economy.
Speaking at a conference in Switzerland, Georgieva stressed that the international system — which allows for the movement of capital between countries — faces major challenges, starting with significant costs.
The head of the Washington-based crisis lender pointed to remittances sent by immigrants to their families.
“The average cost of a transfer is 6.3 per cent. Which means that some $45 billion per year are diverted into the hands of intermediaries” instead of going directly to the recipients, who include “millions of lower-income households,” Georgieva said.
Another major risk is “fragmentation,” she said, noting the Russian invasion of Ukraine has caused “not only tremendous human suffering but also a global economic shock and a sharp increase in the risk of a ‘new Cold War.'” The temptation is for some countries to develop parallel payment systems to offset the risk of potential economic sanctions.
IMF Managing Director Kristalina Georgieva called Tuesday for the modernisation of the cross-border payment system by using digital platforms, arguing that this would reduce the risk of a fragmented global economy.
Speaking at a conference in Switzerland, Georgieva stressed that the international system — which allows for the movement of capital between countries — faces major challenges, starting with significant costs.
The head of the Washington-based crisis lender pointed to remittances sent by immigrants to their families.
“The average cost of a transfer is 6.3 per cent. Which means that some $45 billion per year are diverted into the hands of intermediaries” instead of going directly to the recipients, who include “millions of lower-income households,” Georgieva said.
Another major risk is “fragmentation,” she said, noting the Russian invasion of Ukraine has caused “not only tremendous human suffering but also a global economic shock and a sharp increase in the risk of a ‘new Cold War.'” The temptation is for some countries to develop parallel payment systems to offset the risk of potential economic sanctions.
