New International Projects on the Use of Central Bank Digital Currencies in Transforming Cross-border Settlements

Abstract

In 2023, digital ruble is expected to appear in Russia. It is planned to allow for delay-free settlement of transactions with digital financial assets, automation of the use of smart contracts, and tracking of budget calculations. The Ministry of Finance plans to use the Russian digital currency in budget settlements. The first phase of the experiment to use a digital ruble has already involved a number of banks that are testing the opening of digital wallets on the Bank of Russia platform: deposits, transfers between citizens, as well as payments for goods and services. However, the question remains whether the digital ruble in today's environment will help solve the most important task — to facilitate crossborder payments. While the stage of development and testing is underway, it is necessary to pay particular attention to the issues of risk management, system stability, the peculiarities of interaction with other forms of fiat money, and to ensure the use of digital ruble in cross-border settlements. This article discusses test projects which are aimed at studying the functioning of the main channels of digital transactions, identification of problem areas and improvement of modern technologies in the field of cross-border payments. The purpose of this article is not an in-depth analysis of the results of any particular project, but a brief description of a number of projects to illustrate the activities of central banks of different countries in this area. Nor is it intended to compare these projects and draw conclusions about their results. An example of a more thorough study of some projects in order to use existing experience for new projects is the Report of the National Bank of Kazakhstan “Digital Tenge Project” (2021). All these projects are usually initiated by central banks, as well as international organizations and global financial market participants actively involved in international payment relations. The study of the results achieved during the testing of the projects give us an understanding of how settlements in CBDCs, including cross-border ones, may develop in the near future.