Jul 15, 2021

In principle, cross-border payments through CBDC may be carried out in two different ways.

The first method is that retail CBDC in a specific jurisdiction can be provided to non-residents visiting the relevant jurisdiction or non-residents abroad. In this case, the role of CBDC in cross-border payment is similar to cash. However, unlike cash, through the technical and regulatory design of CBDC, various restrictions can be imposed on cross-border use. In theory, business entities or individuals can hold CBDCs from different jurisdictions and use them to pay in different currencies, possibly through a "wallet" of multiple currencies. The international use of such CBDC is further described as the front-end and retail use of CBDC.

The second completely different approach is the multi-CBDC plan-the design framework, including technical, market structure and legal features, by interconnecting CBDCs from two or more jurisdictions to promote the use of CBDC by users in other currency areas. This is usually applied to wholesale CBDC.

These two situations are not mutually exclusive, and the interaction between them will be reflected in the economic and monetary impact of using CBDC.

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