Kuznetsova V.V., Larina O.I., Glazkova N.G. Development of Cross-Border Payments Using Digital Currencies of Central Banks

Valentina V. Kuznetsova
Lomonosov Moscow State University, Moscow, Russian Federation

Olga I. Larina
State University of Management, Moscow, Russian Federation

Natalya G. Glazkova
Volgograd State University, Volgograd, Russian Federation

Abstract. Traditionally, transborder settlements and payments were carried out on the basis of international correspondent banking, but in recent years, due to active development of digital technologies, opportunities appeared allowing to develop new models for transborder settlement and payment systems. The article analyzes the construction and usage of central bank’s digital currencies (CBDC) for transborder payments and settlements. Theoretically, it is possible to suggest three different models for conducting transborder settlement and payment transactions using wholesale CBDC. They are model of compatible systems of central bank’s digital currencies; model of interlinked systems of central bank’s digital currencies; model of a single multicurrency system of central bank’s digital currencies. Each of these models has its advantages as well as political, legal, and technical limitations. Prototypes of these three models were tested within various international projects that are presented in the article. The authors systematized the strengths of the proposed projects as well as identified problems that have not yet been resolved that hinder the development of cross-border settlement systems based on the CBSS, including: ensuring data confidentiality; lack of effective interoperability models between traditional financial infrastructure systems and DLT-based systems using different technologies; achieving sustainable operation and scaling: adherence to compliance requirements; ensuring operational reliability and sustainability; search for new functionality of technologies; protection of monetary sovereignty.
Key words: cross-border settlements, payments, international correspondent banking, central bank’s digital currencies, transborder payment projects.
Citation. Kuznetsova V.V., Larina O.I., Glazkova N.G., 2023. Development of Cross-Border Payments Using Digital Currencies of Central Banks. Regionalnaya ekonomika. Yug Rossii [Regional Economy. South of Russia], vol. 11, no. 2, pp. 35-47. (in Russian). DOI: https://doi.org/10.15688/re.volsu.2023.2.4

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