CBDCs better poised for cross-border payments than Bitcoin, stablecoins: ECB study

Bitcoin is the worst option for increasing the efficiency of cross-border payments while stablecoins occupy an intermediary position, the European Central Bank (ECB) said in a study published Monday. See related article: Cryptocurrency is worthless: ECB Christine Lagarde Fast facts Central bank digital currencies (CBDCs) and domestic instant payment systems have the highest potential for […]

By Monika Ghosh2022-08-03 6:17 AM UTC

FRANKFURT, GERMANY – JUNE 13: A huge euro logo is seen in front of the headquarters of the European Central Bank (ECB) on June 13, 2005 in Frankfurt, Germany. The German economy was suffering due to the dollar's rise against most major currencies on Monday, especially the euro, which hit a new nine-month low against the dollar. (Photo by Ralph Orlowski/Getty Images)

Bitcoin is the worst option for increasing the efficiency of cross-border payments while stablecoins occupy an intermediary position, the European Central Bank (ECB) said in a study published Monday.

See related article: Cryptocurrency is worthless: ECB Christine Lagarde

Fast facts

Central bank digital currencies (CBDCs) and domestic instant payment systems have the highest potential for making cross-border transactions cheap and immediate, the study said.
Bitcoin cannot solve the challenges of cross-border payments because of its inefficient proof-of-work consensus mechanism, its high volatility, and its use by criminals, the study said.
Stablecoins, on the other hand, pose risks to monetary sovereignty and financial stability in addition to concerns around illicit use, according to the study.
Central banks developing CBDCs should discuss interoperability issues at an early stage to ensure the efficiency of cross-border transactions, the study said.