Modernizing Financial Markets with Wholesale Central Bank Digital Currency

The report explores the value proposition of wholesale central bank digital currency (wCBDC) as a tool to modernize financial markets. It identifies four areas of differentiated value: harmonizing global settlement windows, mutualizing data to reduce settlement failures, expanding payment-versus-payment (PvP) arrangements for foreign exchange, and providing credit risk-free settlement for tokenized securities. The document also distinguishes wCBDC from other digital instruments like deposit tokens and stablecoins, while noting persistent challenges in liquidity management, regulatory interoperability, and technical integration with legacy real-time gross settlement (RTGS) systems.

• wCBDC can provide differentiated value by enabling a 'global settlement window' (proposed as 6:00-11:00 GMT) to harmonize disparate operating hours of RTGS systems across different time zones, which currently limits cross-border trade and post-trade processes.
• The report identifies a significant issue with securities settlement failures, noting that approximately one in ten transactions requires correction or fails, with 4.9% cancelled and 4.8% delayed. wCBDC could mitigate this by mutualizing data to create a 'single source of truth' for standing settlement instructions (SSIs).
• Foreign exchange (FX) settlement risk is increasing due to the limited accessibility of payment-versus-payment (PvP) arrangements, particularly for emerging market economy (EME) currencies. wCBDC could reduce this risk by facilitating affordable multilateral PvP mechanisms and reducing reliance on bridge currencies.
• There is a growing need for tokenized credit risk-free settlement media to support the tokenization of assets. wCBDC allows for the settlement of large-value tokenized securities natively, reducing the capital charges and bankruptcy risks associated with using commercial bank money.
• Certain industry challenges are classified as 'persistent' because they require more than just a new payment instrument to solve. These include liquidity management optimization, where instant atomic settlement may actually increase liquidity demands and the need for pre-funding.
• Cross-border payments are hindered by 'de-risking,' where correspondent banks exit high-risk regions due to AML/CFT compliance costs. This has led to slower processing times in the Middle East, North Africa, and Central Asia.
• The report distinguishes wCBDC from other 'stable value digital assets': reserves-backed digital currencies (RBDCs) are not central bank money (CeBM) and carry operator risk; deposit tokens (DTs) are commercial bank liabilities; and fiat-backed stablecoins (FBSs) are private tokens that can deviate from par in secondary markets.
• Technical interoperability remains a challenge, with the report highlighting three models for CBDC networks: compatibility (common standards), interlinking (hub-and-spoke or bilateral), and single system (common platform).

APA

World Economic Forum (2024). Modernizing Financial Markets with Wholesale Central Bank Digital Currency. https://www3.weforum.org/docs/WEF_Modernizing_Financial_Markets_with_Wholesale_Central_Bank_Digital_Currency_2024.pdf

Chicago

World Economic Forum. Modernizing Financial Markets with Wholesale Central Bank Digital Currency. 2024. https://www3.weforum.org/docs/WEF_Modernizing_Financial_Markets_with_Wholesale_Central_Bank_Digital_Currency_2024.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Modernizing Financial Markets with Wholesale Central Bank Digital Currency |date=April 2024 |url=https://www3.weforum.org/docs/WEF_Modernizing_Financial_Markets_with_Wholesale_Central_Bank_Digital_Currency_2024.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2024modernizing, author = {{World Economic Forum}}, title = {{Modernizing Financial Markets with Wholesale Central Bank Digital Currency}}, institution = {World Economic Forum}, year = {2024}, month = apr, url = {https://www3.weforum.org/docs/WEF_Modernizing_Financial_Markets_with_Wholesale_Central_Bank_Digital_Currency_2024.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }