Hub-and-spoke

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Central bank digital currencies (CBDC) - Bank for International Settlements (BIS) - cross-border transactions.

Hub-and-spoke is an approach to cross-border CBDC transactions in which domestic retail CBDCs do not leave their own systems.

Instead, the cross-border transaction is broken down into two domestic payments, facilitated by a foreign exchange provider active in both domestic systems.


Hub-and-spoke could reduce settlement and counterparty risk
"As detailed in the report, Project Icebreaker sets out to explore a specific way to interlink domestic systems (a so-called hub-and-spoke solution).
A cross-border transaction is broken down into two domestic payments, facilitated by a foreign exchange provider active in both domestic systems.
Therefore, retail CBDCs never need to leave their own systems...


The project also demonstrated that the hub-and-spoke model can reduce settlement and counterparty risk by using coordinated payments in central bank money; and complete cross-border transactions within seconds.
For countries considering the development of a domestic CBDC, the project provides a model for extending them and innovative services into cross-border transactions."
Bank for International Settlements - March 2023.


See also


Other resources