Central banks should pay more attention to the cross-border use of central bank digital currencies (CBDCs) rather than heavily focusing on domestic applications, according to the Bank for International Settlements (BIS), which represents many of the world’s central banks.
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In an article published Friday in conjunction with the World Bank, International Monetary Fund (IMF), the BIS said that central banks are focusing on domestic needs, even as the effects of CBDCs go beyond borders.
The report concluded that if CBDC projects from different jurisdictions are actively coordinated, “a clean startup offered by CBDCs can be leveraged to develop cross-border payments.”
The report stated that cooperation can take various forms. This may include common standards in the middle of CBDCs to allow for interoperability or the establishment of international payment infrastructures.
Additionally, given that CBDCs will be rolled out at different speeds in different jurisdictions, there needs to be interoperability between CBDCs and existing payment systems.
A number of central banks are already carrying out international transfers. The “Multi-Central Bank Digital Currency Bridge” (m-CBDC) project between the central banks of Hong Kong, Thailand, China and the United Arab Emirates was designed to assess the feasibility of an Asian payment network.