BIS: NO CENTRAL BANK DIGITAL CURRENCIES FOCUS ON CROSS-BORDER PAYMENT

The buzz around Central Bank Digital Currencies (CBDCs) is reaching a fever pitch, with over half of the world's central banks actively exploring their introduction. banking and central bank digital currencies. The BIS, as the bank for central banks, convenes dialogue among central banks, conducts cutting-edge research and, most recently, carries out projects to put new technologies into practice through the BIS Innovation Hub. Through its regionalThe potential benefits are tantalizing: streamlined digital payments, a response to the decline of physical cash, and a countermeasure against the volatile world of private cryptocurrencies. CBDC cross-border payments can be made in two ways: first, retail central bank digital currencies (CBDCs) in a given jurisdiction are available to people both inside and outside the jurisdiction, with no coordination between central banks; and second, central banks work together to establish access and settlement arrangements between different retail or wholesale CBDCs (Wan Wu, 2025).Governments are seemingly in a race to be the first to launch a fully functional CBDC.But amidst this flurry of activity, a critical question emerges: Are these digital currencies designed to play a role on the global stage? Amid controversy surrounding the central bank digital currency (CBDC) model, the Bank for International Settlements (BIS) has proposed a new solution for the digital asset that would incorporate both a central bank and retail financial institutions.The Bank for International Settlements (BIS), the central bank for central banks, has highlighted a surprising reality – despite the promise, current CBDC projects aren't prioritizing cross-border payments. More recent payment innovations include mobile money, payment apps, stablecoins and even a new form of central bank-issued money, central bank digital currencies (or CBDCs). 1. CBDCs can be seen as a digital form of the central bank money we have in use today: cash (ie banknotes) and central bank settlement accounts.This raises important questions about the future of international finance and the potential for CBDCs to truly revolutionize how we move money around the world.Is this a missed opportunity, or a pragmatic approach to a complex challenge? Most literature defines CBDCs narrowly, for instance, many CBs focus on their retail and consumer-facing aspects, as outlined in a joint report by seven central banks 4 and the BIS in which CBDCs are defined as a digital payment instrument, denominated in the national unit of account, that is a direct liability of the CB (Group of CentralWhat are the implications for businesses and consumers who rely on seamless international transactions?Let's delve into the details and explore the current state of CBDCs and their limited focus on cross-border functionalities.

The Rise of Central Bank Digital Currencies

The concept of a central bank digital currency (CBDC) is no longer a futuristic fantasy; it's rapidly becoming a tangible reality.Across the globe, central banks are experimenting with and piloting various forms of digital currencies, driven by a range of motivations.From compensating for the dwindling use of physical cash to enhancing payment systems within their own borders, the reasons for exploring CBDCs are diverse and country-specific.

Here are some key drivers behind the CBDC movement:

• Declining Use of Cash: As digital payment methods become increasingly popular, central banks are looking to maintain their role in providing a secure and reliable form of digital money.
• Improving Payment Systems: CBDCs offer the potential to streamline domestic payment systems, making them faster, more efficient, and more accessible to a wider range of users.
• Countering Private Cryptocurrencies: The rise of cryptocurrencies like Bitcoin and stablecoins has prompted concerns among central banks about monetary sovereignty and financial stability. A set of questions, particularly on the cross-border dimensions of CBDCs, remains unresolved, and calls for further work to expand the research frontier. Keywords: money, digital currencies, central banks, central bank digital currencies, CBDC, stablecoins, cryptocurrencies, distributed ledgers, big tech, data privacy.CBDCs are seen as a way to compete with and regulate the digital currency landscape.
• Financial Inclusion: CBDCs can potentially reach underserved populations who may not have access to traditional banking services, promoting greater financial inclusion.

While these motivations are primarily domestic, the implications of CBDCs extend far beyond national borders, particularly in the realm of cross-border payments.

Why Cross-Border Payments Matter

Cross-border payments are the lifeblood of the global economy, facilitating international trade, investment, and remittances.However, these payments are often plagued by inefficiencies, high costs, and a lack of transparency.Traditional cross-border payment systems rely on a complex network of correspondent banks, leading to delays, multiple fees, and limited visibility into the payment process.

Consider a small business in the United States importing goods from a supplier in China. None of the 17 ongoing global CBDC projects goes beyond the central bank s jurisdiction, according to BIS research Please note, this is a STATIC archive of website cointelegraph.com from, cach3.com does not collect or store any user information, there is no phishing involved.The payment process might involve several banks, each taking a cut and adding to the overall cost.The transaction could take days to settle, and tracking the payment's progress can be difficult.This creates uncertainty for both the buyer and the seller, hindering international trade.

The G20 has recognized the critical importance of enhancing cross-border payments and has endorsed a comprehensive program to address the key challenges. Central bank digital currencies (CBDCs) are receiving more attention than ever before. Yet the motivations for issuance vary across countries, as do the policy approaches and technical designs. We investigate the economic and institutional drivers of CBDC development and take stock of design efforts. We set out a comprehensive database of technical approaches and policy stances on issuanceThe goal is to make these payments faster, cheaper, more transparent, and more inclusive. CBDCs have the potential to play a significant role in achieving this goal.

The Potential of CBDCs for Cross-Border Payments

Theoretically, CBDCs could revolutionize cross-border payments by creating a more direct and efficient system.Imagine a scenario where two countries both have CBDCs and have established a connection between their respective systems. a new form of money: central bank digital currency (CBDC). A recent survey found that 80% of central banks are engaged in investigating CBDC and half have progressed past conceptual research to experimenting and running pilots (Graph 1). To coordinate and consolidate some of this work, the centralA payment could be made directly from the sender's CBDC wallet to the recipient's CBDC wallet, bypassing the need for multiple intermediaries and reducing transaction costs. CBDC may help central banks to establish an alternative cross-border payment system. The international monetary system is marked by a hierarchical relationship between currencies, where the US dollar is widely used.This could also significantly speed up settlement times, potentially reducing them from days to seconds.

Here's how CBDCs could improve cross-border payments:

• Reduced Costs: By eliminating or reducing the role of correspondent banks, CBDCs could significantly lower transaction fees.
• Faster Settlement: Direct transfers between CBDC systems could dramatically speed up settlement times.
• Increased Transparency: CBDCs could provide greater visibility into the payment process, allowing both senders and recipients to track their payments in real-time.
• Enhanced Security: CBDCs, backed by central banks, could offer a more secure and reliable payment method than traditional systems.
• Greater Accessibility: CBDCs could provide access to cross-border payment services for individuals and businesses that are currently excluded from the traditional financial system.

BIS Findings: Limited Cross-Border Focus

Despite the potential benefits, the BIS report reveals a concerning trend: none of the 17 ongoing global CBDC projects have an explicit focus on payments beyond the central bank's jurisdiction.This means that while central banks are actively developing CBDCs, they are primarily focused on domestic use cases and are not prioritizing cross-border interoperability. stability and monetary policy. A set of questions, particularly on the cross-border dimensions of CBDCs, remains unresolved, and calls for further work to expand the research frontier. Keywords: money, digital currencies, central banks, central bank digital currencies, CBDC, stablecoins, cryptocurrencies, distributed ledgers, big tech, dataThe BIS research specifically notes that no CBDC project goes beyond the central bank's jurisdiction.

This lack of focus on cross-border payments is surprising, given the significant challenges and opportunities in this area. The paper briefs the Executive Board on the further considerations on CBDC. These cover the positioning of CBDC in the payments landscape, cyber resilience of the CBDC ecosystem, CBDC adoption, CBDC data use and privacy protection, implications for monetary policy operations, and cross-border payments with retail CBDC.It raises questions about the priorities of central banks and the potential for CBDCs to truly transform the global financial landscape.

Several factors may contribute to this limited focus:

• Technical Complexity: Establishing interoperability between different CBDC systems is a complex technical challenge, requiring significant coordination and standardization.
• Regulatory Hurdles: Cross-border payments are subject to a complex web of regulations, including anti-money laundering (AML) and counter-terrorism financing (CFT) rules. As central banks move to adopt digital currencies (CBDCs), two issues arise: the implications for monetary sovereignty and the potential efficiencies from cross-border interoperability. The former is particularly a concern for emerging market central banks, while the latter affects all states.Navigating these regulations across different jurisdictions can be challenging.
• Political Considerations: Cross-border payment systems can raise sensitive political issues, such as monetary sovereignty and data privacy.
• Domestic Priorities: Central banks may be prioritizing domestic use cases for CBDCs, such as improving payment systems and promoting financial inclusion, before addressing the complexities of cross-border payments.

Approaches to Cross-Border CBDC Payments

While current CBDC projects may not be explicitly focused on cross-border payments, there are two main ways in which CBDCs could potentially be used for international transactions:

1. Uncoordinated Access: Retail CBDCs in a given jurisdiction could be made available to people both inside and outside the jurisdiction, without any coordination between central banks. The BIS report reads: Regarding the focus on cross-border interlinkages, no CBDC project has an explicit focus on payments beyond the central bank s jurisdiction. It is noteworthy that several central banks are working on cross-border payment trials with a consumer focus in parallel to their CBDC efforts.This would essentially allow individuals and businesses to use a foreign CBDC for cross-border payments.
2. Coordinated Arrangements: Central banks could work together to establish access and settlement arrangements between different retail or wholesale CBDCs. BIS Papers No 107 Impending arrival a sequel to the survey on central bank digital currency by Codruta Boar, Henry Holden and Amber Wadsworth Monetary and Economic Department January 2025 JEL classification: E42, E58, O33 Keywords: Central bank digital currencies, CBDC, digital innovation, money flower, cryptocurrencies, crypto-This would involve a higher level of coordination and standardization, but could also lead to more efficient and secure cross-border payments.

The second approach, involving coordinated arrangements between central banks, is generally considered to be the more promising option. 2 Central bank digital currencies: system design 1. Introduction and general overview Since 2025, a group of central banks, together with the Bank for International Settlements, have been exploring selected aspects of central bank digital currencies (CBDCs).1 As part of this joint work, the group shares insights and perspectives gainedHowever, it also requires greater cooperation and collaboration among countries.

The Role of Interoperability

Interoperability is a key requirement for enabling cross-border CBDC payments. The distinction between central bank and non-central bank money is fundamental: central bank money is provided as a public good, and for this reason CBDCs are categorically different than private cryptoassets and stablecoins. While some of the factors that may drive their adoption are similar, their consequences would be very different.This refers to the ability of different CBDC systems to communicate and transact with each other seamlessly.Achieving interoperability requires standardization of technical protocols, data formats, and regulatory frameworks.

Several initiatives are underway to promote interoperability in the CBDC space.For example, the BIS Innovation Hub is working on projects to explore the technical and policy challenges of cross-border CBDC payments.These projects aim to develop common standards and protocols that can be used to connect different CBDC systems.

Challenges and Considerations

While the potential benefits of cross-border CBDC payments are significant, there are also several challenges and considerations that need to be addressed:

• Cybersecurity Risks: CBDC systems are vulnerable to cyberattacks, which could disrupt payment flows and undermine confidence in the system.Robust cybersecurity measures are essential to protect CBDC systems from these threats.
• Data Privacy: CBDCs raise concerns about data privacy, as they could potentially be used to track individuals' spending habits. Keywords: central bank digital currencies, CBDC, digital innovation, cryptoassets, stablecoins, cross-border payments, interoperability, financial stability, regulation About the authors Alberto Di IorioCentral banks need to implement strong data protection measures to safeguard users' privacy.
• Monetary Policy Implications: The introduction of CBDCs could have significant implications for monetary policy, potentially affecting interest rates and the money supply. In response, some analysts suggest central banks should issue central bank digital currencies (CBDCs) to maintain government-issued money s central economic role. Although no major central bank has issued a CBDC to date, this In Focus describes how foreign central banks and the Federal Reserve (Fed) are approaching the issue. It alsoCentral banks need to carefully consider these implications when designing and implementing CBDC systems.
• Legal and Regulatory Frameworks: Clear legal and regulatory frameworks are needed to govern the use of CBDCs for cross-border payments. The emergence of central bank digital currencies (CBDCs) is gathering speed, with more than half of the world s central banks actively considering their introduction. The reasons are varied: to compensate for the reduced use of physical notes; to improve payments in digital retail; to respond to private cryptocurrencies that could threatenThese frameworks should address issues such as AML/CFT compliance, data privacy, and consumer protection.

The Future of Cross-Border Payments with CBDCs

Despite the current lack of focus on cross-border payments in ongoing CBDC projects, the potential for CBDCs to transform the global financial landscape remains significant. border context (eg cross-border governance, conflict of laws issues, and adherence to multiple AML and CFT regimes (Bech et al (2025a)). 4 Compared with wholesale CBDCs, the introduction of retail CBDCs is a more far-reaching innovation. Retail CBDCs modify the conventional two-tier monetary system in that they make central bank digital moneyAs central banks continue to explore and develop CBDCs, it is crucial that they consider the cross-border implications and work towards establishing interoperable systems. Skip to main content Bitcoin Insider. MenuThe question of cross-border governance, conflict of laws, and adherence to multiple AML and CFT regimes also needs to be taken into account.

Here are some key steps that need to be taken to unlock the potential of CBDCs for cross-border payments:

• Increased Collaboration: Central banks need to collaborate more closely with each other and with international organizations like the BIS and the IMF to develop common standards and protocols for cross-border CBDC payments.
• Pilot Projects: More pilot projects are needed to test the feasibility and effectiveness of cross-border CBDC payments in real-world scenarios.
• Regulatory Harmonization: Efforts are needed to harmonize regulatory frameworks for cross-border payments, reducing compliance costs and promoting interoperability.
• Public-Private Partnerships: Collaboration between the public and private sectors is essential to develop innovative solutions for cross-border CBDC payments.

The journey towards a truly global digital currency system is likely to be a long and complex one.However, by addressing the challenges and working together, central banks can harness the power of CBDCs to create a more efficient, transparent, and inclusive global financial system.

Are Stablecoins a Viable Alternative?

With CBDC development focusing primarily on domestic use, the question arises: are stablecoins a viable alternative for facilitating cross-border payments? CBDC is a direct central bank liability and a digital form of central bank money that is different from balances in traditional reserve or settlement accounts .7 Retail CBDC: A form of central bank digital currency that is accessible to the public and could be used domestically or cross-border. Retail CBDCs are sometimesStablecoins, cryptocurrencies pegged to a stable asset like the US dollar, offer potential advantages in terms of speed and cost compared to traditional methods. Central bank digital currencies (CBDCs) have the potential to enhance the efficiency of cross-border payments, as long as countries work together. This is the main conclusion of a joint report released today by the Committee on Payments and Market Infrastructures, the BIS Innovation Hub, the International Monetary Fund (IMF) and the World Bank.However, they also come with their own set of risks and challenges.

One major concern is the regulatory uncertainty surrounding stablecoins.Governments worldwide are grappling with how to regulate these digital assets, and the lack of clear guidelines can hinder their widespread adoption. Central bank digital currencies for cross-border payments 1 Executive Summary The G20 has made enhancing cross-border payments a priority and endorsed a comprehensive programme to address the key challenges.1 Faster, cheaper, more transparent and more inclusiveAnother concern is the potential for illicit activities, such as money laundering and terrorist financing, due to the pseudonymous nature of some stablecoins.

Furthermore, the stability of stablecoins can be questionable. While global governments are competing to become the first country in the world to issue a central bank digital currency (CBDC), no CBDC project really focuses on cross-border payments, accordingWhile they are designed to maintain a stable value, some stablecoins have experienced significant price fluctuations, eroding trust and hindering their use as a reliable medium of exchange. Special Feature of the BIS Quarterly Review, March 2025 - Central bank digital currencies (CBDCs) promise to provide cash-like safety and convenience for peer-to-peer payments. To do so, they must be resilient and accessible. They should also safeguard the user's privacy, while allowing for effective law enforcement. Different technical designs satisfy these attributes to varying degreesFor cross-border payments, certainty and stability are critical, and unstable stablecoins can introduce unwanted risks.

While stablecoins offer some promise for improving cross-border payments, they are not a perfect solution and require careful consideration of their risks and limitations. CBDCs, backed by central banks, offer a more secure and reliable alternative, but their lack of focus on cross-border functionality remains a significant drawback.

Conclusion: A Missed Opportunity or a Strategic Approach?

The BIS's findings that current Central Bank Digital Currency (CBDC) projects don't prioritize cross-border payments present a complex picture.On one hand, it seems like a missed opportunity to address a critical area of inefficiency in the global financial system. CBDCs have the potential to revolutionize how money moves across borders, making it faster, cheaper, and more transparent.However, the decision to focus on domestic use cases may be a strategic one, allowing central banks to address immediate needs and gain experience with this new technology before tackling the complexities of international interoperability.Either way, there is no explicit focus on payments beyond the central bank's jurisdiction.Ultimately, central banks should take note of the survey results, and improve on cross-border payment trials.

Key takeaways:

• Current CBDC projects primarily focus on domestic use cases.
• Cross-border payments are a crucial area for improvement in the global financial system.
• CBDCs have the potential to revolutionize cross-border payments, but require international cooperation and standardization.
• Stablecoins offer an alternative, but come with their own risks and challenges.
• The future of cross-border payments with CBDCs depends on increased collaboration, pilot projects, and regulatory harmonization.

As the world continues to evolve towards a more digital future, the role of central banks in providing secure and efficient payment systems will become increasingly important.Whether through CBDCs, stablecoins, or other innovative solutions, the goal should be to create a global financial system that is accessible, affordable, and reliable for everyone.