Cross-Border Payments with Retail Central Bank Digital Currencies: Design and Policy Considerations
Fintech Notes, May 15, 2024
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Bibliographic details
- Authors: Andre Reslow, Gabriel Soderberg, Natsuki Tsuda
- Published: May 15, 2024
- Series: Fintech Notes
- DOI: https://doi.org/10.5089/9798400272035.063
Overview and Purpose
- Authors: Andre Reslow, Gabriel Soderberg, Natsuki Tsuda
- Publication date: May 15, 2024
- Series: Fintech Notes No 2024/002; Issue: 002; Volume: 2024; Pages: 43
- DOI: https://doi.org/10.5089/9798400272035.063
- ISBN: 9798400272035
- ISSN: 2664-5912
- Focus: Retail CBDC—primarily targeting households and non-financial firms; wholesale CBDC considerations left for future work though many discussions are applicable to wholesale CBDC and other forms of money.
Key Findings on Cross-Border Payments with Retail CBDC
- CBDC can help overcome some of the frictions in cross-border payments.
- CBDC is a safe and liquid asset that reduces:
- the number of financial intermediaries involved in a payment chain, and
- settlement risk.
- Designing CBDC systems for cross-border payments is not fundamentally different from tailoring other payment systems, though:
- roles and responsibilities in a CBDC system might be slightly different, and
- the central bank may play a more pivotal role given CBDC’s nature as public money as opposed to commercial bank money.
- The note draws lessons from ongoing experimentation and research to identify design and policy considerations so retail CBDC systems may be compatible for cross-border payments.
Design and Policy Considerations (summary)
- Compatibility objective:
- Develop retail CBDC systems with cross-border payment compatibility in mind while recognizing jurisdictional variations in primary objectives.
- Central bank role:
- Anticipate a more central role for central banks in a retail CBDC ecosystem relative to existing commercial-bank-based money systems.
- Operational design elements:
- Reduce settlement layers and intermediaries to lower settlement risk and improve liquidity.
- Tailor roles and responsibilities to reflect CBDC as public money.
- Scope boundaries:
- The analysis and recommendations focus on retail CBDC; wholesale CBDC is excluded from the main scope but referenced where relevant.
Subjects and Keywords (as listed)
- Subjects: Anti-money laundering and combating the financing of terrorism (AML/CFT), Central Bank digital currencies, Central banks, Crime, Currencies, Economic sectors, Financial institutions, Foreign exchange, Money, Nonbank financial institutions, Technology
- Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), capital flow management, capital flow management measure, CBDC design consideration, central bank digital currencies, cross-border payment, cross-border payments, Currencies, eNaira, fintech, foreign exchange, Global, IMF Library, Nonbank financial institutions, provider restriction
Cross-Border Payments with Retail Central Bank Digital Currencies: Design and Policy Considerations — Fintech Notes 2024/002 (May 15, 2024) by Andre Reslow, Gabriel Soderberg, Natsuki Tsuda.
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