Ensuring that central bank digital currencies (CBDCs) are interoperable and integrated with existing payment infrastructures are among the key requirements for their successful implementation in cross border transactions, according to a joint paper published by Swift and Accenture.

‘Exploring central bank digital currencies: How they could work for international payments’ examines the potential impact of CBDCs on the global payments ecosystem, identifies the opportunities and challenges they present, and outlines Swift’s plans to explore its own role “both as a carrier of authenticated information about CBDC transactions […] and as a carrier of actual CBDC value in whatever form it is issued”.

The paper also examines the practicalities for both international and domestic financial transactions conducted using digital currencies “from the ways in which CBDCs would move across jurisdictions to their integration into the mix of currencies that already exist.

“It also unpacks what’s required for CBDCs to be a viable solution in international payments,” say the paper’s authors. “These include a scalable interchange mechanism, institutions that can provide interoperability, a foreign exchange mechanism, standardised interoperable-rich data, financial crime compliance, a strong governance model, and compatible local infrastructure.”

“While CBDCs will present new challenges and opportunities, the paper concludes there is little advantage in reinventing the wheel. Interoperability will be key to their success, and the smart approach will be to pragmatically combine new solutions with existing infrastructure to derive maximum benefit,” Swift says.

Eight in ten central banks are now actively engaged in digital currency projects, according to a Bank for International Settlements survey published in February.

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