Last week the International Monetary Fund (IMF) published a note exploring design and policy considerations for the use of retail central bank digital currencies (retail CBDC) for cross border payments. To date there have been numerous cross broder CBDC trials, but most have explored using wholesale CBDC, with the exception of Project Icebreaker. Additionally, there are other ad hoc initiatives, such as the use of the digital renminbi outside of China with tie-ups including Hong Kong and Singapore.
The IMF’s paper developed a framework for arriving at design decisions across five areas: access, communication, currency conversion, compliance and settlement.
One of the primary takeways of the Project Dunbar cross border CBDC trial was that many central banks are reluctant to allow foreign banks to access their wholesale CBDC. Hence, access is a key policy decision.
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