- For CBDCs to improve cross-border payments, central banks must make fundamental decisions on foreign access and how CBDCs connect across jurisdictions.
- CBDC design must consider cross-border functionality at an early stage and international cooperation and coordination are prerequisites.
- Joint report assesses different options for access to and interoperability of CBDCs and concludes there is no “one size fits all” solution.
Central banks must make critical choices on the access of non-residents and foreign financial institutions to central bank digital currencies (CBDCs), as well as ensuring multinational interoperability, to fully harness the potential for CBDCs to enhance cross-border payments, according to a new report.
In October 2020, the G20 endorsed a roadmap to improve cross-border payments, which suffer from a lack of speed, transparency and access, as well as high costs. As part of this initiative, the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI), the BIS Innovation Hub, the IMF and the World Bank today published Options for access to and interoperability of CBDCs for cross-border payments, which highlights that CBDCs currently have a key benefit in being able to consider cross-border functionality already during the initial development phase.
However, this “clean slate” advantage has an expiry date. International cooperation and coordination are needed in the early stages of CBDC design. In addition, any system must be built with the flexibility to adapt both to a changing world and the different CBDC designs likely to be chosen by central banks.