- Central banks' favour for CBDCs in cross-border payments down 31% since last year.
- Project mBridge faces concerns over its association with BRICS nations.
- Instant Payment Systems gain traction as the preferred cross-border payment solution.
Interest in central bank digital currencies for enhancing cross-border payments is fading among central banks.
Instant payment systems are emerging as the preferred solution, according to the OMFIF Future of Payments 2024 survey.
Only 13% of respondents now see CBDC networks as the most promising approach, a sharp drop from 31% last year.
The report notes, “High costs are the primary challenge that central banks want to overcome, but there is a remarkable diversity of views when it comes to selecting the best method for doing so.”
mBridge enthusiasm wanes
Project mBridge, currently the most advanced multi-currency CBDC platform, has encountered challenges despite reaching the minimum viable product stage in June 2024.
Liquidity and governance issues are the biggest obstacles limiting its widespread adoption.
One interviewee noted, “mBridge offers a completely new architecture on how to transmit across borders, one that is faster and cheaper,” but the platform’s dependency on Chinese-developed technology raises concerns about decentralisation.
Sanctions evasion has also come under scrutiny as the Bank for International Settlements announced its withdrawal from the project.
BIS General Manager Agustín Carstens stressed, “mBridge is not the BRICS bridge... mBridge was not created to cater to the needs of BRICS,” rejecting the idea that it could aid countries like Russia in bypassing international sanctions.
However, Josh Lipsky of the Atlantic Council remarked, “If there’s even a possibility that mBridge could be helpful to those ambitions, the West wants no part of it.”
Despite assurances, mBridge’s association with China and BRICS nations has amplified Western concerns about its potential to challenge sanctions regimes and financial systems.
IPS gains ground
In contrast, interlinking Instant Payment Systems garnered support from 47% of central banks surveyed, maintaining its position as the top choice for cross-border payments.
This model’s appeal lies in its scalability and growing relevance in domestic markets, particularly in Southeast Asia, where five countries recently trialled Project Nexus.
However, survey respondents cited “governance and developing a regulatory framework” as significant obstacles.
The report notes, “The interoperability models of CBDC design will be a key consideration for global payments going forward,” but enthusiasm has waned.
With only 10% of respondents actively working on multi-currency CBDCs, IPS appears to be the more pragmatic path forward for central banks.
Crypto market movers
- Bitcoin is down 0.5% over the past 24 hours to trade at $96,458.
- Ethereum is even on the day at $3,704.
What we’re reading
- Why Texas’ anti-crypto queen just quit her ‘Sisyphean’ quest to ban Bitcoin mining — DL News
- Could there be a Dogecoin ETF in 2025? ‘Today’s satire is tomorrow’s ETF’ says expert — The Block
- Bitcoin Price Makes Another Run at $100K as U.S. Traders Return After Thanksgiving — CoinDesk
- Ether Gains 19% Against Bitcoin in a Week After Months of Underperformance — Unchained
- The wacky world of memecoins is getting pretty grim — DL News
Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.
