Central banks are increasingly moving away from Central Bank Digital Currencies (CBDCs) in favor of Instant Payment Systems (IPS) for cross-border transactions, according to the latest OMFIF Future of Payments 2024 survey.
The report reveals a dramatic 31% decline in central banks' support for CBDCs compared to last year, with only 13% of institutions now viewing them as the optimal solution for international payments.
Project mBridge struggles to gain traction despite reaching minimum viable product status in mid-2024. The initiative faces ongoing challenges with liquidity management and governance structure. Adding to its troubles, the Bank for International Settlements (BIS) has withdrawn its support, with BIS General Manager Agustín Carstens explicitly distancing the project from BRICS nations.
In contrast, Instant Payment Systems have emerged as the clear frontrunner, with 47% of surveyed central banks backing this approach. IPS has particularly gained momentum in Southeast Asia, where five nations recently conducted trials through Project Nexus. The system's ability to scale and its proven track record in domestic markets have made it an attractive option for cross-border payments.
Despite the growing enthusiasm for IPS, challenges remain. Survey participants highlighted regulatory framework development and governance as key hurdles that need addressing. With just 10% of central banks actively developing multi-currency CBDC projects, the trend suggests a clear shift toward IPS as the preferred path for modernizing international payment infrastructure.
This pivot marks a notable change in central banks' strategic thinking about the future of cross-border payments, indicating a preference for practical, implementable solutions over more experimental approaches.