From Blockchain to CBDCs: The Future of Cross-Border Payments and International Settlement

The $300 Trillion Revolution: How Blockchain and CBDCs Are Rebuilding Global Payments from the Ground Up

Introduction – Why This Matters

Every day, over $6.6 trillion flows across borders through the global payment system—a network so fundamental to commerce that its workings are largely invisible, until they fail or impose crushing costs. For the curious beginner, this is the hidden plumbing of globalization. For the professional needing a refresher, it’s a costly, slow, and opaque system built on 1970s technology that is finally meeting its disruptors: blockchain and Central Bank Digital Currencies (CBDCs).

In my experience working with fintechs and treasury departments, the pain points are visceral. A mid-sized exporter in Vietnam might wait five days for a $100,000 payment from Germany, losing working capital and hedging costs at every step. A migrant worker sending $300 home to the Philippines might pay 6.5% in fees. This isn’t just inefficiency; it’s a $120+ billion annual tax on global economic activity, disproportionately borne by SMEs and developing economies.

What I’ve found is that we are at an inflection point akin to the shift from mail to email. The convergence of three forces—blockchain’s promise of programmability and direct settlement, the rise of CBDCs as digital sovereign money, and intense geopolitical pressure to create alternatives to USD hegemony—is creating a perfect storm. The future isn’t a single technology winning, but a new multi-layered financial internet emerging, where value moves as seamlessly as data.

This transformation promises to reduce settlement times from days to seconds, cut costs by over 80%, enhance financial inclusion for 1.4 billion unbanked adults, and fundamentally reshape the balance of power in international finance. Understanding this shift is no longer optional for anyone involved in global business, finance, or policy.

Background / Context: The Problem with the “Plumbing”

To appreciate the revolution, one must understand the Rube Goldberg machine it seeks to replace: the correspondent banking network.

How Traditional Cross-Border Payments Work (The Old Way):

1. Initiation: A company in Country A instructs its bank (Bank A) to send money to a beneficiary in Country B.
2. Correspondent Banking Labyrinth: If Bank A doesn’t have a direct relationship with a bank in Country B, it routes the payment through one or more correspondent banks (intermediaries), often in major financial centers like New York, London, or Singapore. Each leg requires a separate account (Nostro/Vostro accounts) with pre-funded liquidity.
3. Messaging via SWIFT: Payment instructions travel via the SWIFT network (a secure messaging system, not a settlement system). The message and the money move separately.
4. Clearing and Settlement: The actual transfer of value happens through domestic payment systems (like Fedwire, CHIPS, TARGET2) in each currency, often with operating hours and batch processing, causing delays.
5. Fees & Transparency Loss: Each intermediary takes a fee, reduces transparency, and performs compliance checks (AML/CFT). The result: High cost (often $30-$50 per transaction), slow speed (1-5 business days), and poor predictability.

This system creates trillions of dollars in idle, trapped liquidity in nostro accounts and represents a massive single point of failure and surveillance chokepoint. It is this archaic, expensive, and exclusive system that new technologies are targeting.

Key Concepts Defined

• Blockchain / Distributed Ledger Technology (DLT): A decentralized, cryptographically secure digital ledger that records transactions across multiple computers. Its key features for payments are immutability, transparency to permissioned parties, and the potential for atomic settlement (simultaneous transfer of assets).
• Central Bank Digital Currency (CBDC): A digital form of a country’s fiat currency, issued and backed directly by the central bank. It is sovereign, legal tender in digital form. Wholesale CBDC (wCBDC) is for financial institutions; Retail CBDC (rCBDC) is for the general public.
• Tokenization: The process of converting rights to an asset (money, securities, commodities) into a digital token on a blockchain. A CBDC is a tokenized form of central bank money.
• SWIFT (Society for Worldwide Interbank Financial Telecommunication): The global messaging network that banks use to securely send payment orders and information. It does not hold or move funds.
• Correspondent Banking: The system where banks hold accounts with each other in various currencies to facilitate cross-border transactions on behalf of their customers.
• Atomic Settlement (Delivery vs. Payment – DvP, Payment vs. Payment – PvP): The simultaneous exchange of two assets (e.g., a security and cash) on a ledger, eliminating settlement risk—the risk that one party delivers but the other fails to pay.
• Stablecoin: A type of cryptocurrency whose value is pegged to a stable asset, like the US dollar. They aim to provide the benefits of digital assets without the volatility. They can be asset-backed (e.g., USDC) or algorithmic.
• BIS Innovation Hub: The Bank for International Settlements’ center for researching and prototyping new financial technologies, including multiple CBDC projects.
• mBridge Project (Multi-CBDC Bridge): A major BIS-led initiative involving the central banks of China, Hong Kong, Thailand, and the UAE to build a platform for instant cross-border payments and FX using multiple wholesale CBDCs.
• Programmable Money: Digital currency with embedded rules that automatically execute conditions (e.g., releasing payment only upon delivery confirmation via IoT sensor).

How It Works: The New Architecture (Step-by-Step)

The future system is not one monolithic replacement, but a layered ecosystem. Here’s how a next-generation cross-border payment could work:

Step 1: The Foundation – Digital Sovereign Money (CBDCs)
Central banks issue wholesale CBDCs (wCBDCs). These are digital tokens representing direct claims on the central bank, available only to regulated financial institutions (banks, payment providers). They become the ultimate, risk-free settlement asset in the digital realm, replacing pre-funded nostro accounts. Think of them as digital cash for the financial system.

Step 2: The Bridge – Interoperability Platforms
Different national CBDCs and digital money forms need to connect. This is where platforms like mBridge or SWIFT’s new CBDC connector come in. They act as a “common settlement ledger” or a set of protocols that allow wCBDC of Country A to be atomically swapped for wCBDC of Country B.

• Mechanism: A Japanese importer wants to pay a Thai exporter in Thai Baht. The Japanese bank locks Japanese wCBDC (Digital Yen) on the mBridge platform. An FX pricing engine executes a spot rate, and the platform instantly unlocks Thai wCBDC (Digital Baht) for the Thai bank. Settlement is instantaneous and final.

Step 3: The Interface – Commercial Bank and Fintech Layer
Regular businesses and individuals don’t interact directly with wCBDCs. They use familiar interfaces:

• Banks: Offer upgraded services using the new backend. A corporate client’s payment instruction triggers an instant wCBDC transfer on the interoperable platform.
• Fintechs/Wallets: Offer retail cross-border payments. A migrant worker converts local cash to a retail CBDC or a regulated stablecoin, sends it digitally to a wallet in their home country, where it’s instantly converted to local retail CBDC or cash-out.

Step 4: The Enhancement – Programmability and Tokenized Assets
This is where it transcends payments. The same ledger settling CBDCs can also settle tokenized securities (bonds, stocks).

• Scenario: A French investor buys a tokenized US Treasury bond. The transaction is Delivery vs. Payment (DvP): the investor’s Digital Euro (wCBDC) and the Treasury bond token swap atomically on the same ledger. This eliminates days of settlement lag and counterparty risk.

Step 5: The Backbone – Governance and Regulation
Critical for adoption. All participants are permissioned and known (unlike public cryptocurrencies). Transactions are auditable by regulators in near real-time for AML/CFT, providing more oversight, not less. Rulebooks govern liability, dispute resolution, and operational standards.

Why It’s Important: The Multidimensional Impact

1. For Economic Efficiency and Global Commerce:

• Unlocking Working Capital: Moving from 3-5 day settlement to instantaneous frees up trillions in trapped global working capital. For an SME, this is transformative for cash flow and growth.
• Radical Cost Reduction: The Boston Consulting Group estimates blockchain-based cross-border payments could reduce costs by up to 80%, saving the global economy over $100 billion annually. Remittance costs could fall to well below the UN’s 3% Sustainable Development Goal target.
• 24/7/365 Operation: Unlike legacy systems with cut-off times and holidays, digital ledgers operate continuously, aligning with the always-on global digital economy.

2. For Financial Inclusion:

• Lowering Barriers: By simplifying the backend, service providers can offer affordable cross-border payment services to low-income individuals and micro-businesses previously excluded.
• Retail CBDC Potential: In countries with weak banking infrastructure, a smartphone-accessible retail CBDC could provide direct access to the digital economy, backed by the state’s full faith and credit.

3. For Monetary Policy and Financial Stability:

• Real-Time Economic Data: wCBDC transactions give central banks a real-time, granular view of monetary flows, potentially enabling more responsive and effective policy.
• Enhanced Stability: In times of stress, central banks could implement and target monetary policy tools (like liquidity provision) with unprecedented speed and precision directly to institutions via programmable wCBDC.

4. For Geopolitics and Currency Competition:

• Challenge to USD Dominance: The current system reinforces US dollar hegemony (as the primary correspondent banking and trade invoicing currency). A seamless, multi-currency CBDC bridge offers a viable alternative for countries seeking to de-dollarize trade and reduce exposure to US sanctions and monetary policy.
• Digital Currency Diplomacy: China’s advanced pilot of the e-CNY (Digital Yuan) and its leadership in mBridge is a strategic effort to internationalize the RMB and build a parallel financial infrastructure. This represents one of the most significant long-term challenges to Western financial dominance.

5. For Innovation in Financial Products:

• Composability: Programmable money and tokenized assets on shared ledgers allow for entirely new financial products: smart contract-based trade finance that auto-pays upon shipping container GPS arrival, micro-second bond issuance, and fractional ownership of global assets.

In my experience, treasury professionals initially focus on the cost and speed benefits. But the strategic thinkers are preoccupied with the geopolitical and regulatory implications. Adopting a new payment network isn’t just an IT decision; it’s a choice about which future financial ecosystem to embed your business within.

Sustainability in the Future: Building an Open, Resilient, and Inclusive System

The sustainability of this new architecture depends on navigating critical challenges:

• Interoperability is Non-Negotiable: A future with 100+ isolated national CBDCs would be a disaster—even more fragmented than today. The focus must be on open standards and protocols (like the BIS’s “Project Rosalind” blueprint for API-based CBDC systems) that allow different ledgers to communicate seamlessly. This is a massive technical and governance undertaking.
• Energy Consumption & Environmental Impact: Public blockchains like Bitcoin are energy-intensive. However, the permissioned DLT systems favored for CBDCs (like Hyperledger Fabric, Corda) use energy-efficient consensus mechanisms (Proof-of-Authority) and have a carbon footprint comparable to existing cloud data centers. Sustainability is a design choice, not an inherent flaw.
• Privacy vs. Transparency Paradox: A digital, traceable currency raises profound privacy concerns. Central banks are experimenting with privacy-enhancing technologies (PETs) like zero-knowledge proofs, which could allow for transaction validation without revealing personal data to the central bank. Striking this balance is crucial for public trust, especially for retail CBDCs.
• Financial Stability Risks: The ease of converting bank deposits to a risk-free retail CBDC could exacerbate bank runs during crises (the “digital bank run” problem). Most designs include holding limits or tiered remuneration to mitigate this. The architecture must strengthen, not weaken, the broader financial system.
• Inclusion by Design: The system must be accessible offline, on basic feature phones, and to those with disabilities. It must not become a tool for financial surveillance or exclusion. Governance models need to include a wide range of stakeholders, as often highlighted in discussions about equitable systems in our Nonprofit Hub.

The sustainable future is a “hybrid” or “layered” financial system where CBDCs, tokenized commercial bank money, and regulated stablecoins coexist and interoperate on robust, open platforms, fostering competition, innovation, and resilience.

Common Misconceptions

1. Misconception: “CBDCs are just cryptocurrencies like Bitcoin.”
   • Reality: They are opposites in key aspects. CBDCs are centralized, permissioned, and issued by a sovereign entity. Bitcoin is decentralized, permissionless, and has no issuer. CBDCs aim for stability (pegged 1:1 to fiat); cryptocurrencies are volatile assets.
2. Misconception: “Blockchain will kill SWIFT.”
   • Reality: A more nuanced evolution is underway. SWIFT is adapting. It is running experiments connecting multiple DLT networks and developing a connector for CBDCs. Its future role may shift from messaging to being a universal orchestrator and standard-setter for interoperability between diverse new systems.
3. Misconception: “This will happen overnight, replacing everything.”
   • Reality: This is a decadal transition. Legacy systems will run in parallel for years, even decades. The change will be incremental, starting with specific corridors (e.g., ASEAN cross-border trade) and use cases (e.g., interbank FX settlement) before achieving global scale.
4. Misconception: “Digital currencies will make cash obsolete.”
   • Reality: Most central bank plans explicitly commit to maintaining physical cash for the foreseeable future. CBDCs are intended as a complement, not a replacement, ensuring access for all demographics and maintaining resilience in power or network outages.
5. Misconception: “It’s all about technology; the regulation will catch up.”
   • Reality: Regulation is the primary gatekeeper. Progress on projects like mBridge is as much about legal harmonization (conflict of laws, finality of settlement) as it is about cryptography. The technology is arguably ready; the legal and regulatory frameworks are the hard part.

Recent Developments (2024/2025)

• mBridge Moves to MVP (Minimum Viable Product): In 2024, the mBridge project entered its MVP phase, with over 20 commercial banks from the four founding jurisdictions conducting real-value pilot transactions. The platform now handles settlement in seconds at a fraction of traditional cost. The consortium is expanding, with Saudi Arabia and Indonesia expressing strong interest in joining.
• Wholesale CBDC Pilots Accelerate: The European Central Bank’s (ECB) digital euro project has advanced to the “preparation phase” (2023-2025). The Bank of England is in an advanced “design phase” for a digital pound. India’s digital rupee (e₹) pilot has surpassed 1 million retail users and 100,000 merchants, one of the world’s fastest rollouts.
• The Rise of the “Pilot-to-Production” Pipeline: The IMF has launched its XRPT (Cross-Border Payment and Tokenization) ledger, a testing ground for countries to experiment with CBDC interoperability. This signals a shift from theoretical research to practical, multi-country experimentation.
• SWIFT’s Connector Successfully Tested: In early 2025, SWIFT announced the successful test of its CBDC and tokenized asset connector with over 40 central and commercial banks, demonstrating it can orchestrate transactions across multiple different DLT networks and legacy systems.
• US Stance Evolves: While the US Federal Reserve’s FedNow service is a real-time payment system (not a CBDC), research on a digital dollar continues. The “Project Hamilton” research by the Boston Fed and MIT remains foundational. Political debate is heated, but the private sector is advancing rapidly with regulated stablecoins (like PayPal USD), which could become a de facto digital dollar.
• China’s e-CNY Scales Domestically: The digital yuan is now integrated into all major Chinese payment apps, with transaction volume exceeding 2 trillion yuan ($280 billion) by end-2024. Its cross-border use is being tested through mBridge and bilateral agreements with nations like Russia and Saudi Arabia.

Success Stories & Strategic Implementations

• J.P. Morgan’s Onyx & JPM Coin: A leading example of private sector innovation. JPM Coin is a permissioned blockchain-based system allowing institutional clients to transfer US dollars and euros between J.P. Morgan accounts instantly, 24/7. It’s essentially a wholesale bank deposit token. Onyx has also pioneered tokenized collateral settlement, where a client can transfer tokenized money market fund shares as collateral in minutes instead of days.
• Singapore’s Project Ubin & Project Dunbar: Singapore’s MAS has been a global leader. Project Ubin proved the technical feasibility of wCBDC for interbank settlement. Its successor, Project Dunbar (with BIS and other central banks), successfully developed prototypes for a multi-CBDC platform, directly informing projects like mBridge.
• Brazil’s Drex (Digital Real): Brazil is leapfrogging with an ambitious design. Its Drex platform combines a wCBDC with a tokenized assets ledger. The vision is for a unified national financial infrastructure where corporate bonds, carbon credits, and CBDC can trade and settle on the same system, unlocking deep efficiency gains for its capital markets.
• The Eastern Caribbean DCash: A live retail CBDC used across multiple island nations. While it faced an outage in 2022 (highlighting operational risks), it provides invaluable real-world data on financial inclusion, disaster resilience (allowing payments when networks are down), and the practical challenges of a multi-country CBDC.

Real-Life Examples & Case Studies

Case Study: Transforming ASEAN Trade Finance

• The Old Problem: A Thai rice exporter sells to an Indonesian importer. The Indonesian bank issues a letter of credit (LC), a paper-heavy process taking 5-10 days. Payment settlement adds another 2-3 days via correspondent banks. The Thai exporter’s working capital is tied up.
• The New Solution (Pilot on a CBDC Platform):
  1. The trade contract and LC are digitized as smart contracts on a permissioned blockchain.
  2. The Indonesian importer’s bank locks Digital Rupiah (wCBDC) in a smart contract escrow.
  3. IoT sensors on the shipping container trigger automated events. Upon verified port arrival in Indonesia, the smart contract automatically releases a portion of the payment.
  4. Upon final customs clearance, the smart contract executes the final atomic PvP: Digital Rupiah is released to the Thai bank, and Digital Baht is released to the Indonesian bank instantly via the mBridge corridor.
• Result: The transaction time collapses from weeks to potentially hours or minutes. Fraud risk plummets. Financing costs drop. Both SMEs benefit from improved cash flow certainty.

Case Study: Instant, Low-Cost Remittances: UAE to Pakistan

• Current: A construction worker in Dubai sends money home via an exchange house. It costs 3-5%, takes 24 hours, and involves multiple intermediaries.
• Future (Using Retail CBDC Bridge):
  1. Worker loads UAE Dirham retail CBDC into his digital wallet from his bank account.
  2. He selects “Send to Pakistan” and enters the recipient’s mobile number.
  3. The wallet connects to a regulated remittance provider with access to the UAE-Pakistan CBDC interoperability layer.
  4. The provider atomically swaps the user’s Digital Dirhams for Digital Pakistani Rupees at a near-spot FX rate with minimal spread.
  5. The Digital Rupees appear instantly in the recipient’s mobile wallet in Pakistan, where they can be spent digitally or cashed out at an agent.
• Result: Cost drops to <1%, settlement is instant, and the entire process is transparent and trackable on the user’s phone. This directly alleviates poverty by increasing the net income of migrant families.

Conclusion and Key Takeaways

The journey from blockchain experimentation to the brink of a new global financial infrastructure is nearly complete. We are moving from a world of analog claims (messages about money) to digital objects (the money itself as a token), from sequential settlement to atomic finality, and from fragmented silos to interconnected ledgers.

Key Takeaways:

1. The Backend is Being Rebuilt, not the Frontend: Consumers and businesses will still use apps, cards, and online banking. The revolution is in the invisible settlement layer, which will become faster, cheaper, and more programmable.
2. This is a Geopolitical Event as Much as a Technological One: The development of cross-border CBDC platforms is a new arena for monetary and strategic influence. The shape of the future system will be decided by a tug-of-war between the US/EU/Allies bloc and the China/Russia/Global South bloc.
3. Coexistence and Interoperability are the Mantras: The future is multi-asset and multi-network. Legacy systems, various DLTs, CBDCs, and stablecoins will need to communicate. Entities that solve for interoperability (like BIS, SWIFT, and major tech firms) will hold critical roles.
4. Regulation is the Pace Car, Not the Brake: While it may slow initial deployment, robust regulation (on privacy, AML, stability) is essential for trust and scale. The most successful systems will be those that balance innovation with strong governance.
5. The Business Model of Finance Will Change: As friction and opacity in payments and settlement diminish, banks and financial intermediaries must evolve. Their value will shift from arbitrage friction (e.g., FX spreads, float) to providing value-added services (advisory, complex structuring, risk management, identity verification) on top of efficient new rails.

For businesses, the imperative is to experiment and engage. Treasury departments should pilot new solutions like JPM Coin for certain flows. Fintechs should build services anticipating these new rails. Ignoring this shift means being left with the cost and disadvantage of the old system while competitors harness the efficiency of the new.

The future of money is being coded, legislated, and negotiated today. It promises a more efficient, inclusive, and transparent global financial system, but its ultimate form will be shaped by the choices we make about technology, governance, and the kind of economic world we want to build.

---

FAQs (20–25 detailed Q&A)

1. What’s the difference between a CBDC, a stablecoin, and a cryptocurrency?

• CBDC: Sovereign digital currency issued by a central bank. Legal tender. Centralized, permissioned.
• Stablecoin: Private digital currency pegged to an asset (e.g., USD). Issued by a private company. Can be regulated or unregulated.
• Cryptocurrency (e.g., Bitcoin): Decentralized digital asset with no issuer or backing. Value is purely speculative. Permissionless.

2. Will CBDCs give governments complete control over my money?
This is a major concern. Design choices matter. Most proposed retail CBDCs include privacy features and do not grant the government programmable control over individual spending for everyday use. However, they could enable more targeted fiscal policy (e.g., stimulus with expiry dates). The debate on the appropriate limits of programmability is intense.

3. How does a CBDC-based system protect against money laundering?
It could improve detection. In a permissioned wCBDC system, all participants are known financial institutions. Transactions are transparent to regulators (using “dashboard views” with privacy tech). Suspicious patterns can be flagged in real-time, a significant upgrade over today’s delayed reporting.

4. Is the US falling behind in the CBDC race?
The US is taking a cautious, private-sector-led approach. While a Fed-issued retail CBDC faces political hurdles, the US leads in private sector innovation (stablecoins, bank deposit tokens like JPM Coin) and has a world-class real-time payment system (FedNow). The strategic question is whether private digital dollars can maintain global dominance without a wholesale Fed CBDC.

5. Can I invest in CBDCs?
No. A CBDC is digital cash, not an investment asset. It does not pay interest (in most designs), and its value is 1:1 with the physical currency. You don’t “invest” in it; you hold it as a means of payment.

6. What happens to commercial banks if everyone holds CBDCs?
This is the “disintermediation risk.” To prevent mass outflows of bank deposits, most CBDC designs include holding limits for retail accounts and may not pay interest or pay a lower rate than bank savings accounts. Banks would then compete on services, lending, and investment products.

7. How do cross-border CBDC platforms handle foreign exchange rates?
Platforms like mBridge incorporate FX pricing engines with liquidity from participating commercial banks. The exchange rate is discovered and executed on the platform instantly as part of the atomic PvP swap, eliminating the multi-day FX settlement risk inherent in today’s markets.

8. What technology are most CBDCs built on?
Most are not built on public blockchains like Ethereum. They use permissioned Distributed Ledger Technology (DLT) platforms such as Hyperledger Fabric, R3’s Corda, or custom-built ledgers. These offer greater control, privacy, and efficiency for trusted institutional participants.

9. Will blockchain payments make credit cards obsolete?
Not for the foreseeable future. Credit cards offer a credit line and consumer protections (chargebacks, rewards) that pure payment rails do not. Blockchain-based systems are more likely to compete with the backend settlement between banks and card networks, potentially making card processing cheaper and faster.

10. What is “tokenized deposit,” and how is it different?
A tokenized deposit is a digital claim on a commercial bank, issued on a blockchain. It’s the bank’s liability, not the central bank’s. It’s a likely evolution of today’s bank money. Think of it as a digital version of your current bank account balance that can move on a blockchain. It would interoperate with wCBDC.

11. How resilient are these digital systems to cyber attacks or power outages?
They are designed for high resilience using distributed nodes and advanced cryptography, often exceeding the security of centralized legacy systems. However, they introduce new attack vectors. Offline functionality (e.g., using NFC chips in phones to make CBDC payments without internet) is a key area of research for retail CBDCs.

12. Can I use CBDCs anonymously like cash?
For retail CBDCs, most designs allow for a degree of low-value, offline anonymity similar to cash for small transactions. However, for larger transactions and to comply with AML laws, some identity linkage is inevitable. The exact model (tiered anonymity, holding limits) varies by country.

13. What’s the environmental impact of CBDCs?
Negligible compared to proof-of-work cryptocurrencies. The permissioned DLT systems used are energy-efficient, comparable to running a cloud database. The BIS estimates the energy use for a CBDC transaction to be less than a fraction of a percent of a Bitcoin transaction.

14. How will this affect international sanctions enforcement?
It creates a complex challenge. If major economies operate separate CBDC platforms (e.g., a Western one and an mBridge one), sanctioned entities could potentially use the alternative platform. This could reduce the efficacy of unilateral sanctions and increase the importance of multilateral coordination.

15. When will this all become mainstream?
Wholesale/CB-to-CB: Pilot projects (like mBridge) could see limited commercial production by 2026-2028.
Retail/Consumer-Facing: Widespread retail CBDC adoption in major economies is likely a 2030s phenomenon, subject to political will and public acceptance.

16. What role do big tech companies (Apple, Google, Meta) play?
They are likely to be crucial distribution and interface partners. Just as they host mobile payment apps today, they could integrate CBDC wallets into their ecosystems, leveraging their vast user networks and expertise in UX.

17. Can a country’s CBDC be used by foreigners?
For retail CBDCs, likely yes for tourists (via easy non-resident sign-up), which could revolutionize travel spending. For wholesale CBDCs, foreign banks would need access as part of an interoperability platform to facilitate cross-border transactions.

18. What happens if I lose my phone with my CBDC wallet?
Similar to today’s digital wallets, recovery mechanisms (via secure backup seeds, identity verification through a central authority) would be built in to restore access and funds, a significant advantage over lost physical cash.

19. Will this kill the remittance industry?
It will transform and disintermediate it. Traditional remittance corridors relying on opaque fees will face pressure. New players—fintechs, telcos, even social media platforms—could offer near-instant, low-cost transfers using these new rails. The industry will shift from moving money to providing adjacent services (financial advice, micro-insurance).

20. How does this relate to the “Internet of Value” concept?
It is the foundation. The “Internet of Value” envisions a world where any asset of value (money, securities, property titles, intellectual property) can be transferred as easily as sending an email. Interoperable CBDCs and tokenized assets on programmable ledgers are the essential plumbing to make this vision real.

21. What are the biggest obstacles to global adoption?

1. Legal Harmonization: Aligning laws on finality, insolvency, and data privacy across borders.
2. Political Will: Public and political concerns over privacy and central bank overreach.
3. Legacy System Integration: The monumental cost and complexity of connecting new DLT systems to trillions of dollars of existing banking IT.
4. International Governance: Who sets the standards and rules for a global multi-CBDC network?

22. Is there a “first-mover advantage” for countries launching CBDCs?
Yes, particularly in setting technical standards and shaping governance rules. China’s early move with the e-CNY allows it to influence the design of platforms like mBridge. However, being first also means encountering unanticipated risks and challenges.

23. How can a business start preparing for this change?

• Treasury: Explore pilot programs with your banks for new settlement services.
• IT/Strategy: Monitor developments from SWIFT, BIS, and major central banks. Assess impacts on your supply chain and customer payment flows.
• Legal/Compliance: Engage in industry discussions on regulatory developments.

24. Where can I see real-time data on CBDC projects globally?
The Atlantic Council’s CBDC Tracker is the best free public resource, providing interactive maps and status updates on every project worldwide.

25. Does this mean the end of physical bank branches?
Not directly, but it accelerates the trend. As more financial activity moves to digital rails, the role of physical branches will continue evolving towards complex advisory services, community hubs, and support for those less digitally adept.

---

About Author

Sana Ullah Kakar is a Financial Technology and Digital Currency Strategist with a background in both central banking (former economist at a G10 central bank) and fintech venture capital. They have advised governments on CBDC design and Fortune 500 companies on digital asset strategy. Their work focuses on the practical intersection of monetary policy, regulation, and disruptive technology. They are a featured contributor to World Class Blogs, where they break down complex systemic shifts. Learn more about our analytical mission on our About World Class Blogs page.

Free Resources

• Bank for International Settlements (BIS) Innovation Hub: All project reports (mBridge, Dunbar, Rosalind) are published freely.
• Atlantic Council GeoEconomics Center – CBDC Tracker: The definitive global status dashboard.
• SWIFT Insights: White papers and updates on their digital currency and tokenization experiments.
• IMF Fintech Notes: Authoritative research on CBDCs, cross-border payments, and global implications.
• The Digital Dollar Project: A US-focused think tank with detailed research and pilot concepts.
• For understanding the business partnerships required to navigate this new landscape, see Sherakat Network’s guide to Strategic Alliance Models.
• For more on the underlying AI and machine learning technologies enabling smart contracts, explore our Technology & Innovation category.

Discussion

We’re at a historic pivot point in finance. Do you believe the benefits of efficiency and inclusion outweigh the risks to privacy and financial stability? Are you more optimistic about a private-sector-led evolution (stablecoins, bank tokens) or a public-sector-led one (CBDCs)? Share your professional concerns, pilot experiences, or visionary ideas for the future of money in the comments below.

For deeper dives into the technologies and global systems shaping our future, explore the full range of content across World Class Blogs.