As a result of a growing number of central bank digital currencies (CBDCs) projects being implemented around the globe, central banks are increasingly criticizing decentralized cryptocurrency, such as bitcoin (BTC). These efforts may become more coordinated as central banks call for greater CBDC-related international collaboration.
The Bank of International Settlements, the International Monetary Fund and the World Bank have released a new report on the G20 states. It identified many questions that “need to” be considered in order for CBDCs support the enhancement of cross border payments. They approach them from two perspectives.
- The practical one: exploring how a cross border payment infrastructure with CBDCs might be created.
- A macro-financial perspective “examining the possible increase in cross-border flow, financial stability risks and currency substitution as well as reserve currency configurations, backstops, and currency substitution.”
This report also highlights the need to collaborate multilaterally on macro-financial implications, as well the importance of interoperability among CBDCs.
A statement was included. The authors acknowledge that CBDCs can facilitate cross border payments when authorities coordinate at an international level. This collaboration is crucial for CBDCs to improve cross-border payments.
Accordingly, the G20 has approved a roadmap to address key issues in reforming cross-border payment systems to make them more affordable, faster and more reliable.
“While most of the actions in the roadmap seek to improve cross-border payments ecosystems, CBDCs offer an opportunity to start with a clean slate,” Sir Jon Cunliffe (Chair of the Committee on Payments and Market Infrastructures and the Deputy Governor for Financial Stability of UK’s central Bank of England), said.
“It is vital that central banks consider the cross-border dimension in their work regarding potential CBDCs to avoid many of today’s challenges and legacy technologies.”
Cecilia Skingsley (Deputy Governor, Swedish central bank Riksbank) commented that countries in the intergovernmental forum G20 have made it a priority to improve cross-border payments.
CBDCs are part the ongoing review because they may, in time, and when combined with other improvements, advance cross-border payments methods. This work is just in the right place. Skingsley stated that the World Bank, IMF and Central Banks have come together to share common thinking, before CBDCs are launched on a larger scale.
The G20 is an international group that includes Argentina, Brazil, China, France and Germany. It also includes India, Indonesia and South Korea.
The BIS is based in Basel, Switzerland. It claims it is jointly owned the world’s central banks. These central banks represent countries that collectively account for 95% of the global GDP.
Agustin Carstens (General Manager of the BIS, former Governor of central Bank of Mexico) retweeted a speech he gave two years ago on Crypto Twitter. This prompted debates about privacy. Carstens stated that 2019 will see CBDCs give central banks “absolute control” of the rules and regulations governing how CBDCs can be used.
He said, “Also we’ll be able to enforce that,”