Central banks should pay more attention to the cross-border use of central bank digital currencies (CBDCs) rather than focusing mainly on domestic applications, according to the Bank for International Settlements (BIS), the body that represents most of the world’s central banks.
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In a paper published Friday in conjunction with the World Bank, the International Monetary Fund (IMF), the BIS said central banks are focusing on domestic needs even as the effects of CBDCs go beyond borders.
The report concluded that if CBDC projects of different jurisdictions are effectively coordinated, “the clean start 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 between CBDCs to allow 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.
Some central banks are already making 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.