Amara's Law and CBDC Development

The evolution of cross-border payment networks Current Deposit-based Future? New networks and means of payments Ledger Country A Country B Ledger Central Bank Central Bank Domestic Payment System Domestic Payment System Ledger Ledger Bank Bank Bank Bank Nonbank Nonbank Nonbank Nonbank Payor Payee --- Route 1: Correspondent Banking Route 2: Payment System Link Ledger Ledger Ledger Ledger Ledger Choice of deposit-based and token-based systems ✓ Less reliance on correspondent banks New digital cross-border payments networks have the potential to increase efficiency by: Reducing cost of verification and cost of networking (Catalini and Gans, 2020) Shifting trust from identity to object (Kahn and Roberds, 2009), underpinned by technology Shifting trust from bilateral relationships to multilateral networks governed by common rules (Adrian, Garratt, He, Mancini-Griffoli, 2023) INTERNATIONAL MONETARY FUND 10

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