IMF and World Bank rush to release digital bank currencies
The leading global financial institutions have released a report calling on central banks to work together to achieve “interoperability” between their digital currencies. The document, published on Friday (9), was prepared by the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and the World Bank.
In the report, the institutions outline how this global cooperation should work. Among other things, they highlight the creation of common standards and the establishment of international payments infrastructure.
“Central bank digital currencies are a potential avenue to improve international payments. But they bring risks to emerging and developing economies. They also require a lot of work on regulatory and policy conditions to be successful,” said Indermit Gill, vice president of the World Bank.
As the report pointed out, the G-20 has made cross-border payments a priority. For these leaders, it is essential that these payment services are faster, cheaper, transparent and inclusive.
Based on this, the three institutions developed the report in question presenting a balance of the international dimension of the CBDC projects.
In addition, they assessed the extent to which these national digital currencies can be used for cross-border payments. The report also investigates possible macro-financial implications associated with the international use of CBDCs.
According to the document, if digital currency projects in different jurisdictions are effectively coordinated, international payments can be improved.
Furthermore, as CBDCs will be implemented at different paces, interoperability between projects and existing payment systems is required.
According to the institutions, cross-border payments with CBDCs can be designed in two different ways. The first scenario involves the existence of a retail-oriented digital currency. That is, for home use.
The second case includes interoperability between CBDCs based on agreements to facilitate cross-border use.
“Such arrangements can connect wholesale and retail CBDCs across borders. Thus, it would imply strong cooperation between central banks and include technological, market structure and legal aspects.”