As digital currencies and emerging financial technologies transform the global financial system, ensuring interoperability between different networks, institutions, and jurisdictions is becoming increasingly important.
The development of central bank digital currencies (CBDCs) and other digital assets presents opportunities to improve payment efficiency, financial inclusion, transparency, and cross-border transactions. However, without coordinated international standards, these innovations risk creating fragmented systems that limit their potential benefits.
Prepared by the Digital Dollar Project in partnership with the Atlantic Council’s GeoEconomics Center, Interoperability Standards for Digital Assets explores the technical, regulatory, and governance frameworks needed to support interoperable digital currency networks.
Published in November 2023, the working paper reviews existing international standard-setting initiatives, identifies gaps in the emerging landscape, and proposes five areas for further framework development. The paper is intended to inform international dialogue and collaboration rather than prescribe a definitive set of standards.
Why Interoperability Matters for Digital Currencies
Interoperability is the ability of different financial systems, technologies, and networks to communicate and operate together effectively. In the context of digital currencies, it is essential to enabling the transfer of value across payment platforms, financial institutions, and national borders.
As countries explore retail and wholesale CBDCs, differing approaches to design, implementation, and regulation create the potential for isolated digital currency networks.
Without common standards, these systems could replicate many of the inefficiencies of traditional payment infrastructure, limiting opportunities for faster, more accessible, and more cost-effective transactions.
The working paper examines why interoperability must extend beyond technology alone. It emphasizes the need for coordinated technical, regulatory, and governance standards that promote consistency, security, and trust while allowing flexibility for national policy objectives and future innovation.
The International Standards Landscape
International organizations and regulatory bodies have undertaken significant work to develop frameworks governing digital assets, cryptocurrencies, payment systems, and CBDCs.
The paper provides an overview of the global standard-setting landscape, examining the contributions of major institutions, including:
- The International Monetary Fund (IMF)
- The Bank for International Settlements (BIS)
- The Financial Stability Board (FSB)
- The Financial Action Task Force (FATF)
- The Basel Committee on Banking Supervision (BCBS)
- The International Organization of Securities Commissions (IOSCO)
- The Committee on Payments and Market Infrastructures (CPMI)
- The International Organization for Standardization (ISO)
These organizations address different aspects of the digital financial ecosystem, including financial stability, payment infrastructure, cybersecurity, consumer protection, anti-money laundering requirements, and technical security standards.
The paper evaluates how these initiatives contribute to international digital asset interoperability and considers where further coordination is needed to establish more consistent approaches to CBDC development.
Identifying Gaps in Global Standard-Setting
Despite progress in digital currency research and experimentation, international efforts to establish interoperability standards remain fragmented.
The working paper identifies several challenges within the standard-setting landscape, including differences in national regulatory approaches, limited international participation in some wholesale CBDC experiments, and inconsistencies in the development and implementation of technical standards.
It also highlights the importance of ensuring that emerging market economies are adequately represented in international standard-setting discussions, particularly as many have made significant advances in digital financial infrastructure.
A further challenge is the limited availability of consistent mechanisms to evaluate how effectively international standards are implemented across jurisdictions.
Addressing these gaps requires greater collaboration among central banks, regulators, industry participants, technology providers, international organizations, technical and nonfinancial standards-setting bodies, and civil society.
Five Key Priorities for CBDC Interoperability Standards
To provide a foundation for future international standards, the working paper identifies five interconnected areas for further exploration and framework development.
1. Governance
Establishing clear governance and regulatory frameworks that support financial and monetary stability, uphold public policy objectives, and provide mechanisms for assessing and mitigating risks associated with CBDC implementation.
2. Privacy and Data Protection
Developing standards that safeguard personal information, establish appropriate data protection requirements, and address cybersecurity and operational resilience. This includes navigating differences in privacy regulations across jurisdictions while supporting secure cross-border transactions.
3. Competition and Consumer Protection
Promoting an open, secure, and competitive digital payments ecosystem that supports innovation, consumer choice, and fair access. The paper also examines how standards can address financial crime prevention while respecting individual privacy rights.
4. Global Impact and Sustainability
Considering the broader economic and environmental implications of digital currencies, including cross-border information sharing, international financial stability, and energy-efficient digital currency infrastructure.
5. Transferability and Accessibility
Ensuring that CBDCs can interact with existing financial infrastructure, emerging payment technologies, and other digital currency networks. International technical standards can support more seamless transactions across payment systems and jurisdictions.
Together, these priorities provide an initial framework for evaluating how international CBDC standards can support interoperability, resilience, accessibility, and responsible financial innovation.
Advancing International Collaboration on Digital Money
The development of effective interoperability standards requires cooperation between the public and private sectors, supported by participation from financial institutions, technology innovators, policymakers, academics, consumer advocates, and civil society organizations.
The paper emphasizes that international standards should not be static. They must remain adaptable to technological advancements, changing economic circumstances, and evolving public policy considerations.
Rather than prescribing a single CBDC model or definitive technical solution, the research provides a foundation for international dialogue and continued collaboration on the standards needed to support digital currencies.
By identifying existing efforts, highlighting areas for improvement, and outlining potential approaches to standard-setting, the working paper contributes to a broader discussion about creating an interconnected, secure, and inclusive global digital financial system.
