A study by the Bank for International Settlements (BIS) has discovered the introduction of central bank digital currencies (CBDCs) may lead to greater foreign exchange controls.
The BIS study saw the surveying of 50 central banks worldwide about the possible use of CBDCs for cross-border payments. While the bank claims the results were ‘indecisive’, there were particular areas where more clarity was found on the topic.
For example, 29% had a clear view of whether countries would allow incoming foreign visitors to use the local retail CBDC while visiting, like they would with physical cash. This included 25% of respondents stating the visitors could use the CBDC, while 4% said they shouldn’t.
However, the BIS claimed there was ‘far greater concern’ about allowing retail CBDC usage outside of its host country due to a lack of control, with even stronger doubt about the potential for a foreign CBDC or global stablecoin to be used domestically.
The study found 26% of respondent nations already have foreign currency use restrictions within their borders. For the 66% of those that claimed they don’t have any restrictions, 39% said they would contemplate introducing restrictions if CBDCs were introduced.
The survey also asked respondents whether the central bank was considering making its cross border digital currency interoperable with foreign CBDCs for the use of a wholesale CBDC for cross-payments. Of those surveyed, 70% stated they were either undecided or said maybe later, while 28% were interested in interoperability and 2% said they were against it.
Copyright © 2021 RegTech Analyst
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