The payments industry – including regulators and banks, as well as technology companies – is largely aligned in their desire to create a cross-border payments system for the modern age. But at least among central banks, the consensus is that central bank digital currencies must justify their existence with other merits — improving financial inclusion for one.
While central banks do think that interlinking CBDCs might be a promising avenue for enhancing cross-border payments, survey results revealed today as part of OMFIF’s third annual ‘Future of payments’ report show that central banks are not pursuing CBDC in order to provide a solution to the cross-border payments problem.
However, payments industry participants are working on a raft of initiatives to address the inadequacies of the cross-border payments market. This year’s ‘Future of payments’ report focuses particularly on the challenges of cross-border payments for emerging market countries. It delves into the validity of cryptocurrencies and stablecoins as a means of escaping domestic inflation and sending cheap remittances. It examines the value proposition of central bank digital currencies for emerging markets, as well as looking at some of the progress made by CBDC cross-border integration projects.
There is much more to improving cross-border payments than digital currencies. The report looks at the progress made towards achieving the Committee for Payment Market Infrastructures’ targets in cross-border payments and discuss some of the major issues preventing improvement.
OMFIF’s survey results indicate that, as central banks move into more sophisticated technological areas, cybersecurity is among their primary concerns. The report discusses the regulations and practices that central banks, particularly in emerging markets, must adopt to keep their systems secure from the growing threat of cyber-attacks.
Finally, it examines what payments systems designed for the metaverse will look like, and what unique use cases they will have to serve