Digital Currencies and Cross-Border Payments: An Overview

Digital currencies are one of the latest innovations in payment systems being explored by governments, institutions, firms, and households. Digital currencies promise faster, cheaper, and more transparent transactions, especially across borders, but there are concerns about effective implementation and the need for regulatory oversight.

This brief contrasts two main types, Central Bank Digital Currencies (CBDCs) and cryptocurrencies (which are not backed by government central banks), and their cross-border usage.