Central banks must take necessary steps to promote cross-border interoperability and must make important decisions regarding financial institutions and foreign investors’ access to central bank digital currencies (CBDCs), according to a report by the Bank for International Settlements .
These are key steps to reaping the full benefits offered by CBDCs in cross-border payments, according to the report CBDC Access and Interoperability Options for Cross-Border Payments, which is published jointly by the BIS Committee on payments and the market. Infrastructures (CPMI), the BIS Innovation Hub, the International Monetary Fund and the World Bank.
This recognizes that central banks have multiple reasons for developing CBDCs and therefore it is important to ensure interoperability between the different designs and cross-border arrangements that these central banks will use, as well as linkage with existing CBDC systems. non-CBDC payment.
The report assesses these options based on five core criteria: do no harm, improve efficiency, increase resilience, ensure coexistence and interoperability with non-CBDC systems, and promote financial inclusion.
The authors note that there is no “one size fits all” model for accessing CBDCs and promoting CBDC interoperability. Therefore, the report offers guidance to central banks on how best to apply CBDCs to achieve their cross-border payments goals.
Reflecting on this central bank toolkit, Cecilia Skingsley, Chair of the CPMI’s Future of Payments Task Force and First Deputy Governor of Sveriges Riksbank, Sweden’s central bank, says: “At the end of 2021 , more than a quarter of central banks were developing or running CBDC pilots. To ensure that cross-border features are taken into account in time, central banks around the world must collaborate at an early stage.
“Only then can CBDCs have a meaningful impact on the cost, speed, access and transparency of cross-border payments.”