IMF, World Bank, BIS Recommend Countries Work Together on CBDCs to Enhance Cross-Border Payments
The International Monetary Fund (IMF), the World Bank, and the Bank of International Settlement (BIS) have conducted an extensive study of using central bank digital currencies (CBDCs) for cross-border payments. Their report to the G20 states that enhanced cross-border payments “can be achieved … as long as countries work together.” The Committee on Payments and Market Infrastructures, the BIS Innovation Hub, the International Monetary Fund, and the World Bank published a joint report to the G20 on July 9 titled “Central bank digital currencies for cross-border payments.” The report explains that “Cross-border payments are commonly criticized for their high cost, low speed, limited access, and insufficient transparency.” To address these challenges, the G20 countries endorsed a roadmap in October last year. It was developed by the Financial Stability Board (FSB) and other relevant standard-setting bodies. Various aspects of central bank digital currencies (CBDCs) were analyzed in the report. This includes domestic and potential designs, current central bank thinking on cross-border CBDC use, and the potential benefits and risks of using CBDCs for cross-border payments. Enhanced cross-border payments “can be achieved through different degrees of integration and cooperation,” the report claims. “The analysis highlights both the need for multilateral collaboration on macro-financial consequences as well as the importance of interoperability between CBDCs.” According to the main conclusion of the joint report: Central bank digital currencies (CBDCs) have the potential to enhance the efficiency of cross-border payments, as long as countries work together. Many central banks are currently investigating risks, benefits, and various designs of CBDCs, the report details, noting no major jurisdiction has launched a CBDC so far and many design and policy decisions are still unresolved. Some central banks are already in the testing phase, such as China. The full joint report can be found here.
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