Towards cross-border CBDC interoperability: insights from a multivocal literature review

Abstract

PurposeCentral banks from more than 100 countries, representing 95% of the global financial output, are studying Central Bank Digital Currencies (CBDCs). CBDCs can potentially enable safe, efficient and inexpensive cross-border and cross-currency payments in today's interconnected financial system. However, a critical factor influencing their expansion is cross-border interoperability. Therefore, there is a high demand from central banks, researchers, computer scientists, policy- and decision-makers to explore this topic further. Its better understanding will improve information management, enhance the decision-making process, and result in the redesign of central banks' processes and products (digital currencies).Design/methodology/approachThe authors investigate this novel and timely topic by conducting a Multivocal Systematic Literature Review (MSLR) on CBDCs cross-border interoperability. Additionally, the authors collect and analyze empirical data from various online resources such as CBDC trackers.FindingsThe authors conclude that although the academic literature on CBDC cross-border interoperability is very limited, valuable documents published by central banks and other entities discuss this issue and provide valuable insights. The authors paid particular attention to the reports published by the Bank of International Settlement (BIS) as it proposes three different models for CBDC cross-border interoperability. The study research reveals that most CBDC cross-border interoperability projects run by several central banks and other organizations explore these three BIS models. For this research, the authors performed an in-depth study of CBDC cross-border interoperability cases to investigate all three BIS models. The findings illustrate that although technical interoperability is feasible, plenty of work needs to be done in terms of standards and interfaces. In addition, other non-technical interoperability areas need to be explored and addressed, as there are concerns related to legal issues, regulations, jurisdictional boundaries, policy challenges and governance.Research limitations/implicationsResearch on CBDCs is progressing quickly, so, despite the authors’ use of an MSLR to identify the state-of-the-art, interested parties should be aware that new information is prone to appear imminently. Hence, this study work should be understood as a basis to build upon. Also, although the authors have included major academic databases in this study search, there is the possibility that a few papers may have been published in outlets that the authors have not covered. Finally, since the search in the grey literature returned thousands of hits, the authors had to define a stopping criterion for the documents to analyze.Practical implicationsThe authors provide insights on the current state of CBDC cross-border interoperability, which is valuable to policy- and decision-makers currently assessing the situation and deciding on avenues to pursue.Originality/valueThe authors provide an integrated and critical view of the developments of CBDC cross-border interoperability, considering not only available academic literature but also fundamental documents from key institutions such as central banks and related organizations.