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Using central bank digital currencies across borders: Lessons from practical experiments
Journal of Payments Strategy & Systems,
17
(1),
46-57
(2023)
Abstract
Central bank digital currencies (CBDCs) could help to deliver better cross-border payments. With projects InthanonLionRock2, Jura, Dunbar and mBridge, the BIS Innovation Hub has been leading practical experiments to show how CBDCs could make cross-border payments faster, cheaper and more transparent. This paper looks at similarities and differences across these four cross-border CBDC experiments with a view to setting out the insights and lessons learned. These experiments demonstrate that platforms with two or more CBDCs are technically feasible and could lower costs, make settlement faster and increase operational transparency. Nevertheless, policy, legal, governance and advanced feasibility questions remain. Work will continue with future phases of the experimentation.
Keywords: cross-border payments; CBDC; DLT; central banks; innovation; experiments
The full article is available to subscribers to the journal.
Author's Biography
Morten Bech is the Head of the BIS Innovation Hub Swiss Centre. Prior to this, he led the secretariat supporting the Committee on Payments and Market Infrastructures. He has also served as Secretary to the Markets Committee. He previously worked for the Federal Reserve Bank of New York and the Danish Central Bank. He holds a PhD in economics from the University of California, Santa Barbara.
Codruta Boar is an adviser at the BIS Innovation Hub. Before taking up her current assignment, she was part of the secretariat supporting the Committee on Payments and Market Infrastructures. She has also worked at the Financial Stability Surveillance Division of the European Central Bank. She holds a master of research in economics (MRes) from the Universitat Autònoma de Barcelona.
Daniel Eidan is an adviser and solution architect at the BIS Innovation Hub, where he builds technology solutions for the central banking community with a special focus on blockchain and central bank digital currencies. Before joining the BIS, he led the digital currency work at R3, was a software engineer and a technical educator. He holds a degree in computer science and mathematics from the University of Toronto.
Philipp Haene is an adviser for digital currencies in the Swiss National Bank’s (SNB) international monetary cooperation unit. Prior to this, he worked at the Swiss Centre of the BIS Innovation Hub on projects relating to central bank digital currencies and tokenisation. He has also worked as Deputy Head of Financial Market Infrastructure Oversight at SNB, and represented SNB in the CPMI-IOSCO Steering Group responsible for developing the Principles for Financial Market Infrastructures.
Henry Holden is an adviser at the BIS Innovation Hub, where he leads innovation projects related to wholesale markets, clearing and settlement. Prior to joining the BIS, he worked at the Bank of England on market infrastructure oversight and policy. He is a chartered accountant and studied philosophy at Durham University.
Wee Kee Toh is an executive director at J.P. Morgan, where he is Head of Business Architecture for Onyx Coin Systems. Prior to this, he was an adviser at the BIS Innovation Hub, where he led Project Dunbar with a vision to enable interoperable central bank digital currencies. Wee Kee joined the BIS from the Monetary Authority of Singapore, where he was a specialist leader for distributed ledger technology and led Project Ubin.
