A joint report by the World Bank, the International Monetary Fund (IMF), and the Bank of International Settlements (BIS), states that a network of central bank digital currencies (CBDC) could be advantageous to the world’s economy. The report suggested that the G20 should consider establishing such a technologically integrated network to boost international financial cooperation.
According to the report, the existing framework for cross-border payments leaves much to be desired. It is mostly characterized by high transaction costs and heavy delays because of several middlemen working in different time zones.
The report also mentions that cross-border payments are sometimes difficult to trace. This makes it challenging to fight financial crime and enforce Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) standards.
The joint report suggests that countries working on domestic applications of CBDCs should consider spreading this functionality further. It says:
“To date, no major jurisdiction has launched a CBDC and many design and policy decisions are still unresolved. Also, most CBDC investigations by central banks focus on domestic issues and use cases.”
If countries decide to adopt the report’s recommendation, they would all have to collaborate to make sure multiple CBDCs are properly integrated to ensure uniformity in design and to mitigate macro risks.
Image Credits: Pixabay
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