While central banks are focusing on the domestic use of central bank digital currencies (CBDCs), the Bank for International Settlements (BIS) believes that CBDCs should be used across borders.
In a document published jointly with the International Monetary Fund (IMF) and the World Bank, the BIS proposed the G20 to create a cross-border CBDC network.
While cross-border networks are commonly criticized for high costs, slow speeds, limited access, and lack of transparency, the global financial triumvirate believes CBDC has the potential to make a difference.
“If CBDC projects in different jurisdictions are effectively integrated, then CBDC can be used to increase cross-border payments,” the document explains.
At the same time, most of the CBDC research and development of leading banks is mainly focused on domestic use rather than international payments.
A survey conducted in the first quarter of 2021 with 50 central banks showed that most central banks have a negative view of cross-border use of CBDCs.
25% of Central Banks considered exclusively retail use of CBDCs by non-residents, 20% said they had not yet considered such an opportunity, and only 8% of central banks planned to allow cross-border retail issuance of CBDCs.
The undisputed leader in CBDC implementation among central banks is China. The country is preparing to test the digital yuan during the 2022 Beijing Winter Olympics.
In addition, France, Switzerland, Singapore and Bahrain are at the forefront of this process.