Key Insights: 

• IMF and DCMA launched a CBDC called UMU to improve cross-border transactions.
• UMU uses SPOT protocol, AI-powered monetary policy framework, and global localization architecture.
• UMU aims to provide a solution for central banks while mitigating currency depreciation.

During the IMF Spring Meetings 2023, the Digital Currency Monetary Authority (DCMA) and the International Monetary Fund (IMF) unveiled the Universal Monetary Unit (UMU), commonly known as Unicoin, which is a central bank digital currency (CBDC) designed to strengthen monetary independence while complying with the IMF’s recent guidelines on cryptocurrency assets.

Cross-border transaction revolution

Tobias Adrian, currently serving as the Financial Counsellor at the IMF, believes that a multilateral platform is essential to improving cross-border transactions. He also believes that such a platform has the potential to revolutionize foreign exchange transactions, risk sharing, and financial contracting.

As stated by the DCMA, the Universal Monetary Unit (UMU) aims to provide a legally accepted currency commodity that can be traded in any settlement currency recognized by law. Represented by the ANSI character Ü, the UMU functions as a central bank digital currency, implementing banking regulations and safeguarding the financial soundness of the global banking system. Moreover, it allows the secure linking of SWIFT Codes and accounts to a digital wallet, easing real-time cross-border payments.

The Staked Proof of Trust (SPOT) Protocol, a multi-dimensional Distributed Ledger Technology (mDLT), and an Artificial Intelligence (AI)-driven central banking monetary policy framework are the technologies behind the operation of UMU. The DCMA labeled UMU “Crypto 2.0,” highlighting its enormous potential for widespread use in the global economy.

Envisioning IMF’s monetary solution

To provide central banks throughout the globe with the answer envisioned by the IMF, the UMU was designed by Darrell Hubbard, Executive Director of the DCMA and the currency’s primary architect. The UMU can operate in conformity with the central banking legislation of each member state because of its global localization public monetary system design.

George Walker, a Partner at Practus, LLP, observed that the International Monetary Fund (IMF) had not issued official support for the UMU; nevertheless, the IMF has not stated any complaints about the UMU’s foreign currency premium rates or its approach to monetary sovereignty.

Additionally, the UMU Model Law was developed in collaboration with several independent nations, and it suggests that the UMU should be deployed as an additional currency to hold value. This is to serve as a payment medium throughout the settlement period while also reducing the danger of seasonal and systemic depreciation of the local currency.