Why Cross-Border Payments Are Not Prioritized in the Global CBDC Race

The Central Bank Digital Currency Dilemma

In a world racing to digitize currencies, you might think that cross-border payments would be at the forefront. But a new report from the esteemed Bank for International Settlements (BIS) has revealed a shocking truth: Not one of the 17 countries exploring Central Bank Digital Currencies (CBDCs) has prioritized this area. You could almost hear the collective facepalm from financial analysts around the globe.

Current CBDC Landscape

As of now, countries like Iceland, Norway, Brazil, and Israel are diving headfirst into the murky waters of CBDCs. Yet, despite the crucial dialogue surrounding the potential for faster, cheaper, and less risky cross-border payments, the BIS emphasizes the absence of projects specifically targeting this need. The glaring lack of global initiatives focusing on cross-border payments raises eyebrows, and perhaps the question: are we all just playing digital currency hide-and-seek?

Cost-Benefit Analysis: The Dissenting Voices

Not everyone is on the CBDC bandwagon. Countries like Denmark and Switzerland are scratching their heads over the practicality of retail CBDCs. It’s like watching two friends argue over who gets the last slice of pizza, while the rest of the group is busy planning a feast. The BIS report indicates that while many banks consider CBDCs a medium-term priority, some jurisdictions are skeptical about their overall benefits.

Voices of Optimism

Despite the reluctance of some, there are champions of the CBDC cause. Christine Lagarde, president of the European Central Bank, envisions a world where CBDCs facilitate seamless cross-border payments. Canada, the UK, and Singapore share the sentiment, believing that CBDCs could help mitigate credit risk in international dealings. Their optimism is akin to looking at the glass half full while others are still refilling the pitcher.

Case Studies: The Pioneers

Take Sweden, for example. This Scandinavian powerhouse began testing its e-krona digital currency in early 2020. Meanwhile, the Bahamas isn’t just watching from the sidelines. Dubbed Project Sand Dollar, their CBDC initiative is on track for a nationwide rollout, proving that some countries are ready to dance while others are still deciding on their rhythm.

In Summary

The BIS report sheds light on the disparities in how nations approach the digital currency revolution, particularly regarding cross-border payments. As countries either forge ahead or hold back, one thing is clear: the journey toward a unified digital payments landscape is still very much in motion, albeit at a pace that varies from country to country.