Crypto Could Aid Central Banks: Report

FILE: Representative illustration of Ethereum, with its native cryptocurrency ether. Taken 11.29.2021

Global rules would allow central bank digital currencies to operate smoothly cross-border and speed up wholesale payments, a think tank backed by the City of London Corporation said on Friday.

The International Regulatory Strategy Group, a think tank backed by the City and TheCityUK, said in a report published on Friday there are many benefits to including central bank digital currencies (CBDCs) in wholesale digital payments if they are made "interoperable" for cross-border transactions.

"Key to realising the full potential of CBDCs is ensuring that they can operate across different markets to facilitate wholesale cross-border payments," said Kay Swinburne, chair of the International Regulatory Strategy Group.

"Global regulatory principles and collaboration will be needed to realise this vision."

Most central banks, including the Federal Reserve, the Bank of England and the European Central Bank, are studying the potential launch of a digital version of their currencies.

Britain has said any digital version of sterling would not be available under the second half of this decade, while the Fed has said a digital dollar could help maintain the greenback's international standing.

Harmonization of rules would allow firms who are licensed in one jurisdiction to provide services in another, and stop countries trying to undercut each other with laxer rules, the report said.