The International Monetary Fund (IMF), the World Bank, and the Bank of International Settlements (BIS) in a joint report have proposed to the G20 that a cross-border network of central bank digital currencies (CBDCs), underpinned by efficient technological integration and proactive international cooperation, could be of significant benefit to the world economy. Major central banks across countries are actively exploring digital currencies’ options.
CBDCs could enhance the efficiency of cross-border payments.
The global financial regulators’ joint report focuses on broadening the horizon beyond central banks’ individual studies of CBDCs for domestic needs, emphasizing that it is crucial to coordinate work at a global scale and find common ground between various national efforts to reap the full potential benefits of digital currency. If tackled astutely, the IMF, the World Bank, and the BIS believe that the creation of CBDCs could offer a “clean slate” that would enable the global financial system to enhance the efficiency of cross-border payments significantly.
Global financial regulators highlight the benefits that CBDCs could present for increased efficiency and enhanced economic inclusion against the potential global macro-financial implications and risks involved in the widespread use of CBDCs for cross-border flows.
BIS backs central banks in creating CBDCs.
Earlier, Hyun Song Shin, Economic Adviser and Head of Research of the BIS, in a speech at their recent Annual General Meeting in Basel, said, “digital innovation implies a “triple imperative” for the central bank in its role at the foundation of the monetary system: competition, data privacy and the integrity of the payment system.” Given the rapid digitization of the world, CBDCs can “better capture public interest,” he added. Several governments across countries are exploring the CBDC option to ward off the competition from decentralized and private digital currencies.