Multi-CBDC arrangements: transforming words into works

Speech by Agustín Carstens, General Manager of the BIS, Hong Kong Fintech Week, 4 November 2021

BIS speech  | 
04 November 2021
4 Nov 2021 Hong Kong Fintech Week

Jointly operated payment systems involving multiple central bank digital currencies (multi-CBDCs) are a way to improve cross-border payments and settlements.

It is my great pleasure to join you today for Hong Kong Fintech Week. I would like to thank the Hong Kong Monetary Authority and the other organisers for inviting me to participate. Hong Kong SAR is a special place for the BIS. It is the home for our Asia-Pacific regional office, and for one of our first three Innovation Hub Centres. Its vibrant fintech ecosystem is a constant source of innovation and inspiration.

Today, I would like to focus my remarks on the merits of central bank digital currencies (CBDCs) as a mechanism for improving cross-border payments and settlements.

We all know the complaints about the current framework for cross-border payments. The correspondent banking system is slow, opaque and expensive. The development of CBDCs holds the promise to address these problems.

It is worth remembering that CBDCs are the best way to promote the public interest in the area of digital money.1 Money is a public good. A country's monetary system must ultimately be based on a currency issued by the central bank for the good of the public.

Around the world, central banks are working hard on CBDCs, both wholesale and retail. Three retail CBDCs have already gone live. Pilots in 25 jurisdictions are under way. And conceptual work is ongoing in many countries.2 There are many choices to be made in designing a retail CBDC. These are ultimately a matter for the national authorities based on domestic considerations. But they also have international implications.

The unique features of central bank money – settlement finality, liquidity and integrity – can be extended beyond borders. CBDCs offer the promise of a cross-border framework for payments and settlements that is stable, efficient and coherent. And they offer a worthy alternative to private sector projects like stablecoins.

Whether for domestic or cross-border use, CBDCs should embody three guiding principles.3 First, coexist with other types of money. Second, do no harm to financial or monetary stability. And third, promote innovation and efficiency.

CBDCs can improve the efficiency of cross-border payments, but only if countries work together.4 Multi-CBDC arrangements are an important example of cooperative arrangements between central banks that can improve the cross-border payments system. How? By improving compatibility, interlinking or integrating national payment systems.5

Three different models can be considered.

The first model promotes greater compatibility between different national payment systems. Harmonised regulatory frameworks, market practices and messaging formats can make it easier for these systems to interoperate.

But integration can go even further. A second model contemplates linking two domestic payment systems together. Technical interfaces will allow the two systems to interoperate.

The third model is the most ambitious. Beyond interlinking domestic systems, central banks could establish a single multi-CBDC system. They would create a jointly operated payment system upon which they would each issue a CBDC. The CBDCs could be traded between central banks and financial institutions. In this way, they could settle cross-border payments while bypassing the correspondent banking system.

I personally never cease to wonder about the promise that these models hold. Nor does the BIS Innovation Hub. With projects mCBDC Bridge, Dunbar and Jura, the Hub combines the good "old" of economics and governance with the better "new" of technology to understand the practicalities of such arrangements.

Project mBridge in our Hong Kong Centre is a case in point. It is an example of the third model I just described: a jointly operated platform. Together with partner central banks in China, Hong Kong, Thailand and the United Arab Emirates, in the project's most recent phase we investigated whether a new DLT cross-border payment network could reduce the cost and increase the speed of cross-border payments.

Indeed, the answer is yes! The prototype achieved a substantial improvement in cross-border transfer speed from multiple days to seconds. Second, the cost of such operations for users can also be reduced by up to half.

The prototype let participating central banks control the flow of their CBDC and monitor transactions and balances of their issued CBDC with programmable levels of transaction privacy and aspects of automated compliance. It used algorithms and smart contracts to improve liquidity management along the transaction chain – as opposed to individual correspondent banks having to manually estimate supply and demand and pre-fund their own individual accounts. This is a paradigm shift in how cross-border payments are currently managed. For countries with limited access to the correspondent banking network, this could be a game changer.

But the exploration of multi-CBDC arrangements issues does not end there. The prototype is now being further developed, with a focus on scalability, operational governance, multi-currency liquidity mechanisms and privacy controls. I am sure you will hear more in the next session of the conference.

Our work on multi-CBDC arrangements is closely linked with the G20 efforts to improve cross-border payments. While CBDCs hold a lot of promise for the not too distant future, improvements in other areas of the cross-border payments programme6 are key. We also need to explore in parallel interoperability between fast payment systems – which the BIS Innovation Hub is also investigating with Project Nexus.

It is certainly true that there is great scope for technological innovation. As the guardians of the monetary system from their vantage point at the core of cross-border payments ecosystem, central banks have a critical role in these multi-CBDC arrangements. International collaboration is key to make it work for the benefit of all. The BIS is uniquely placed to support this work.

Thank you.


1         See BIS, "CBDCs: an opportunity for the monetary system", Annual Economic Report 2021, Chapter III, June 2021.

2         See Rise of the central bank digital currencies: drivers, approaches and technologies (

3         See Group of central banks, Central bank digital currencies: foundational principles and core features, October 2020.

4         See BIS Innovation Hub, Committee on Payments and Market Infrastructures, International Monetary Fund and World Bank, Central bank digital currencies for cross-border payments – report to the G20, July 2021.

5         See R Auer, P Haene and H Holden, "Multi-CBDC arrangements and the future of cross-border payments", BIS Papers, no 115, March 2021.

6         See Financial Stability Board, Enhancing Cross-border Payments: Stage 3 roadmap, October 2020.