World Bank, IMF, BIS Push For Central Bank Cryptocurrencies To Improve Cross-Border Payments | Currency News | Financial and business news
- The BIS, IMF and World Bank released a report on central bank digital tokens for the G20.
- The report suggests that CBDCs could make cross-border payments faster, cheaper and more transparent.
- However, countries need to collaborate with each other as the implications “will go beyond borders,” according to the report.
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Central bank digital currencies could greatly improve current international payment systems, says report by the World Bank, the International Monetary Fund and the Bank for International Settlements late last week.
The report, which the group sent to the G20, pointed out that the so-called CBDCs have the power to offer cross-border payments that are faster, cheaper, transparent and more inclusive than the traditional financial system. But, the group said, collaboration will be essential.
“The implications of CBDCs, even if they are intended only for home use, will cross borders, making it crucial to coordinate work and find common ground. If successfully coordinated, the clean slate presented by the CBDCs could – over time and in combination with other improvements – be leveraged to improve cross-border payments, ”the report says.
A CBDC is a digital currency issued by a central bank. CBDCs have already been issued by the Bahamas which launched the Eastern Caribbean Sand Dollar and DCash.
The current system suffers from long transaction times and can be costly due to all the systems in place around the world, according to the report. There is also a lack of transparency and traceability.
Central banks like the Federal Reserve, which are studying a digital dollar, have said the tokens will not be completely anonymous to prevent fraud and money laundering. Account users would need identification to access a wallet for retail and wholesale use.
There is the possibility for countries to restrict the CBDC to residents only, as is the case with China digital yuan.
With a number of countries considering their own CBDCs, there are still many unanswered questions about how new and existing infrastructure will coexist, the impact on monetary policy, and the role the private sector could play, among others.
“In order to achieve the potential public welfare benefits while preserving financial stability, further exploration of the design choices of CBDCs and their macro-financial implications is essential,” the report says.