On 31 October 2023, the Bank for International Settlement’s Committee on Payments and Market Infrastructures (CPMI) published a report on considerations for the use of stablecoin arrangements in cross-border payments.
The report highlights a range of considerations and challenges regarding the use of stablecoin arrangements in cross-border payments but does not recommend any particular features. The report focuses on stablecoins denominated in a single fiat currency, or pegged to one, and not on issues specific to other types of stablecoin. The report first discusses key features of stablecoin arrangements that are relevant from the perspective of cross-border payments. Second, it highlights a range of relevant considerations and challenges. Third, it analyses how stablecoin arrangements might interact and coexist with other payment methods. Fourth, it evaluates the potential impact of their use on the monetary policy, financial stability and payment functions of central banks.
The report acknowledges that no stablecoin arrangements yet exist that are deemed to be properly designed and regulated and fully compliant with all relevant regulatory requirements. Further, even if such stablecoin arrangements did exist and could help to address specific cross-border payment frictions, they might not necessarily positively impact cross-border payments as the drawbacks could outweigh any potential benefits.
The report also makes clear that any benefits from the cross-border use of stablecoin arrangements must not be achieved by compromising on the principle of “same business, same risks or risk profile, same regulatory outcome.