The BIS Committee on Payments and Market Infrastructures & Innovation Hub issued a joint report, with contributions from the International Monetary Fund (IMF) and the World Bank. It seeks to enable central banks to make fundamental decisions on CBDC foreign access across jurisdictions & interoperability.
The 61-page report “Options for access to and interoperability of CBDCs for cross-border payments” aims to foster multinational interoperability in order to fully realize the potential of central bank digital currencies (CBDCs) to improve cross-border payments.
According to the Bank for International Settlements (BIS), CBDC is “central bank money in a digital format, denominated in the national unit of account, that is a direct liability of the central bank and can be used for retail payments and/or wholesale settlement.”
The G20 endorsed a roadmap in October 2020 to improve cross-border payments, which are slow, ambiguous, and expensive.
It acknowledges that there is no “one-size-fits-all” model for CBDC access and interoperability. Because central banks have different reasons for exploring or developing CBDCs, different CBDC designs and cross-border arrangements are likely.
The report identifies and analyzes CBDC access and interoperability options that could improve cross-border payments, including how CBDC payment arrangements can interconnect with non-CBDC payment arrangements.
The BIS establishes five criteria for central banks to consider when considering CBDC options. Central banks must avoid causing harm, improve efficiency and resilience, ensure coexistence and interoperability with other systems, and promote financial inclusion.
Cecilia Skingsley, Chair of the CPMI Future of Payments Working Group said, “By the end of 2021, more than a quarter of central banks were developing or running CBDC pilots. To make sure that cross-border functionalities are considered in time, central banks across the globe must collaborate at an early stage. Only then can CBDCs have a significant impact on the costs, speed, access and transparency of cross-border payments.”
