international integration: The Potential of CBDCs to Boost global trade and financial inclusion

The introduction of Digital Real and CBDCs has created high expectations regarding international integration and cross-border payment systems.

Internationally renowned experts participated in a series of webinars organized by the Central Bank and available on YouTube, discussing the possibility of CBDCs streamlining this type of transaction.

The optimization of cross-border transactions brings numerous benefits, including boosting global trade, economic growth, and financial inclusion. small and medium-sized enterprises, in particular, would greatly benefit from cost reduction and increased access to global markets.

Currently, several projects and experiments are underway in the field of cross-border transactions. Some projects are of a public nature, led by a consortium of central banks, while others are carried out in collaboration with the BIS Innovation Centers (Bank for International Settlements). Additionally, the private sector is also engaged in these efforts.

In a report presented to the G20 in July 2021, the BIS outlined three scenarios/models through which CBDCs could enhance existing systems. The first scenario is based on compatible systems, the second on interconnected systems, and the third on a single system, which would entail higher implementation costs.

On the other hand, the IMF published an article last June mentioning the creation of XC, a platform that would establish a centralized and global ledger for cross-border payments. This platform would allow banks and other payment providers to participate in the process together with central banks.

According to Tobias Adrian, Financial Counselor of the IMF and Director of the Monetary and Capital Markets Department, the design of XC aims to increase competition, reduce margins, and decrease risks. To achieve this, it would provide infrastructure, contracts, and markets for transfers with immediate liquidity, as well as instruments for better risk protection.

However, there are challenges to be overcome on the path of CBDCs regarding the integration between the regulated and unregulated world. How the Central Bank will handle this integration is still unknown. Market expectations are optimistic, especially regarding the emergence of new platforms and services that can establish a connection between these two worlds and people's daily lives.

CBDCs have the potential to transform the way cross-border transactions are conducted, boosting global trade and promoting financial inclusion. As we move towards the future, it is essential to address the challenges and find efficient solutions for the integration of CBDCs in the international landscape. The expectation is that this will bring significant benefits to the global economy and the lives of people worldwide.