While there has been a hype around central bank digital currencies (CBDC's) recently, according to the Bank of International Settlements (BIS), few have cross border payments functions built in.
The competition to become the first country to have a nation-wide ad operational CBDC is on. While there are some examples of digital currencies issued by states, these are often in the testing phase or only available to a specific group of people. The finding of the BIS, however, is based on a recently conducted study called "International banking and financial market developments" and could be labelled as surprising. One of the spearpoints of digital currencies is that they can be transferred cross-border quickly against low costs.
The BIS research
The study analyzed seventeen ongoing CBDC's initiatives as well as other developments with significants impact like the Coronavirus outbreak. Among the seventeen initiatives are projects operated by Isreal, Brazil, Norway, Iceland, France, China and the ECB. Among the seventeen projects, there are only two which have an international focus, the E-Euro from the ECB and DXCD from the Eastern Caribbean.
Especially for the E-Euro, this does not mean the CBDC's is focussed on cross-border payments; it is developed for members of the European Union, hence the international priority.
The following is said in the report:
"Regarding the focus on cross-border interlinkages, no CBDC project has an explicit focus on payments beyond the central bank's jurisdiction. It is noteworthy that several central banks are working on cross-border payment trials with a consumer focus in parallel to their CBDC efforts."
Furthermore, the benefits of CBDC's are being evaluated and challenged. Denmark and Switzerland, for example, think that the cost would outweigh the value CBDC offers, at this moment at least.
On the other hand, there are jurisdictions like Sweden, launching their test of the e-krona this February, and The Bahamas, which expects to roll out their CBDC across the country in the second half of 2020, are doubling down on their efforts.