Yesterday the European Central Bank (ECB) published a paper, “Towards the holy grail of cross-border payments“. It explores six potential avenues for addressing the current inefficiencies of cross border payments, half of which use blockchain. The blockchain options include using the Bitcoin network, stablecoins, and crossborder central bank digital currency (multi-CBDC) with an FX conversion layer.
One of the biggest hurdles in addressing payment challenges is the friction of anti-money laundering (AML) processes. While the paper predicts that one of the six paths will uncover the holy grail of cross border payment, there’s a big caveat. It assumes there will be progress in addressing AML and CFT compliance inefficiencies. That’s not a trivial assumption.
Regarding what is classed as meeting the ‘holy grail’, the paper says payments should be immediate, cheap, universal and settled in a secure medium such as central bank money.
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