Share this article
A joint committee of the BIS Innovation Hub, the International Monetary Fund (IMF), and the World Bank has proposed keeping interoperability in mind while designing central bank digital currencies (CBDCs) to foster the growth of cross-border payments.
Interoperability Between CBDCs
Several leading international financial officials want to make sure that CBDCs are interoperable.
The BIS Innovation Hub, International Monetary Fund (IMF), and the World Bank published a 34-page report Friday with alternative designs for a globally interoperable payment system of CBDCs.
They found that one of the key problems in the current payment system is the lack of efficient coordination between entities, leading to higher costs, delays, and deductions. The committee promoted a joint effort in designing CBDCs “to support the enhancement of cross-border payments.”
One of the designs involved a censorship-resistant CBDC, which anyone could own and transact worldwide. However, according to the committee’s responses from over 40 central banks, only 8% of them are considering use beyond domestic boundaries.
The preferred design among banks is likely to be the “m-CBDC” model. It requires the payment systems to be compatible with the various digital currencies or connected so that the amount is paid in one CBDC and the payee receives it in a different CBDC. The central banks would need to form an international technical standard regarding CBDCs.
The report said that m-CBDCs “could be preferable to alternative proposals that involve the creation of private sector global stablecoins” like Facebook’s Libra. Moreover, the BIS has held a negative stance on cryptocurrencies and stablecoins because of their lack of credibility, and the various kinds of regulatory and financial risks involved with investing in them.
The international committee said it wants to benefit from the “clean slate” opportunity that’s surfaced as most central banks are still in the planning or development stage for CBDCs.
The report noted that there are currently only two live retail CBDCs: the Sand Dollar in The Bahamas, and DCash in the Eastern Caribbean. The report also mentioned China’s efforts in launching a pilot program of their CBDC, which has been promoted via free airdrops to citizens and infrastructure development focusing on digital currency adoption.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Bitcoin “Has Few Redeeming Public Interest Attributes” says BIS
A scathing report from the Bank for International Settlements (BIS) claims Bitcoin “has few redeeming Public Interest Attributes.” The BIS as the Banks’ Bank The Bank for International Settlements serves…
What is Polygon (MATIC): Ethereum’s Internet of Blockchains
In terms of both decentralized app (DApp) development and adoption, no blockchain has been more successful than Ethereum (ETH). But despite its relative success, the Ethereum network still contains several…
“Be Right, Not First,” Says Fed Chairman Powell on a Digit…
“We have not made a decision to issue a CBDC,” said Fed Chairman Jerome Powell in his speech during today’s International Monetary Fund (IMF) event devoted to the cross-border payments….
Central Banks Recommended to Ban Stablecoins
Today, the Financial Stability Board (FSB) released a document addressing the regulatory, supervisory, and oversight challenges raised by global stablecoins. The document, although only consultative in nature, reveals disturbing plans for…