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Central bank digital currency (CBDC) development aims squarely at inclusion, both for the central bank in the national economy and for the people it serves. Meanwhile, the technology for cross-border payments is being developed elsewhere for the most part, according to a new report on the payments industry. 

The Digital Money Institute (DMI), part of the Official Monetary and Financial Institutions Forum think tank, released its third annual Future of Payments report on Dec. 8. The report was sponsored by several payments companies and crypto exchange Binance, and those companies penned sections that supplemented DMI’s findings. This was the first time it included a survey of central banks.

The DMI staff found in its survey that CBDC development was “gaining momentum,” with two-thirds of central banks expecting to have CBDCs within a decade. Another 12% of central bank respondents said they did not expect to issue a CBDC at all. When asked about their objectives, more than a quarter of central banks mentioned preserving their roles in money provision and more than 10% mentioned financial inclusion. “Other” was indicated more often.

None of the banks chose “aid cross-border payments” as one of their objectives. Nonetheless, almost 35% of the banks saw interlinking CBDCs as the most promising way to improve those payments. When asked about stablecoins, nearly 90% of banks identified it as “an opportunity to make cross-border payments more efficient.”

Related: Global think tank suggests blockchain in public finance can help reduce fraud

Fiat-based cross-border payment systems are developing rapidly. However, there are significant hurdles to achieving global reach, especially data exchange, as only around 70 countries have adopted the ISO20022 messaging standard. The DMI report assures that “Regionally integrated payment networks offer an exciting prospect.” Still, 80% of African cross-border transactions are processed off the continent. In general, payments are “unlikely to be a ‘winner-takes-all’ kind of fight,” the report said. “The variety of payments systems will grow, creating competition and diversity in the marketplace.”

Cryptocurrency and stablecoins are making their greatest strides in emerging economies, as they offer the advantages of disintermediation (which enables faster settlement across time zones), cost savings and accessibility, but have the potential downsides of volatility and unreliability. In the authors’ opinion:

“Vulnerable nations should invest in bringing down the cost of remittances and broadening access to financial services to reduce the exposure of vulnerable economic groups to volatile and unsafe cryptocurrency products.”

Finally, the report looks at the metaverse from a payments perspective, calling it “first and foremost, a model for a digital economy.” Here, cross-platform interoperability is key and will likely require “major changes to business models.” In turn:

“Developing the infrastructure to make metaverse payments stable, secure, interoperable and free from financial crime will have a huge impact on the broader payments landscape.”

The report cites a Citi estimate that the Metaverse addressable market could reach $13 trillion.