Wholesale central bank digital currency vs traditional real-time gross settlement: Benefits beyond a new acronym?

Central banks need to modernise their wholesale payment services. This is not to say they must choose between modernising their real-time gross settlement systems or building a new wholesale central bank digital currency system. Rather, as this paper will argue, they must develop a common, standardised hybrid platform for the global financial (wholesale) markets. Indeed, central banks need to provide interoperable cross-border payment services by accepting foreign participants and coordinating their short-term liquidity instruments. This paper argues that if central banks want to serve future wholesale markets, they will need to provide 24/7/365 services with cross-border finality for simple fund transfers, but also for deliveryversus-payment and payment-versus-payment settlements at the transaction level. The paper will discuss how interoperability is a key issue, and requires completely common message and communication standards, but especially common identification and security standards in which distributed ledger technology and transaction-chaining are important elements. Wholesale systems must be highly resilient. As this paper shows, cooperation between central banks is essential if they are to deliver cross-border wholesale payment services for the global financial markets of the future.