BIS Says Central Banks Must Consider Cross-Border Implications of CBDCs

BIS Says Central Banks Must Consider Cross-Border Implications of CBDCs

Central banks should pay more attention to the cross-border use of central bank digital currencies (CBDCs) rather than concentrating mainly on domestic applications, according to the Bank for International Settlements (BIS), the organization that represents most of the world’s central banks.

  • In a paper published Friday, the BIS said central banks are focusing on domestic needs, even though the implications of CBDCs go beyond borders.
  • If different jurisdictions' CBDC projects are coordinated effectively, the "clean slate presented by CBDCs might be leveraged to enhance cross-border payments," the paper concluded.
  • Cooperation could take various forms, the BIS said. It could include common standards between CBDCs to allow for interoperability, or the establishment of international payment infrastructures.
  • Additionally, given that CBDCs will roll out at different paces in different jurisdictions, there needs to be interoperability between CBDCs and existing payment systems.
  • Some central banks are already exploring international transfers. The "Multiple Central Bank Digital Currency Bridge" (m-CBDC) project between the central banks of Hong Kong, Thailand, China and the United Arab Emirates, is designed to evaluate the feasibility of a pan-Asian payments network.
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