CBDC Interoperability for Cross-Border Transactions Technical and Regulatory Perspectives

Abstract

The global transition toward Central Bank Digital Currencies (CBDCs) presents both an opportunity and a challenge for achieving efficient, transparent, and interoperable cross-border payment systems. While national-level CBDC initiatives focus primarily on domestic financial inclusion and settlement efficiency, the lack of standardized interoperability frameworks threatens to fragment the international monetary ecosystem. This paper examines the technical and regulatory dimensions of CBDC interoperability for cross-border transactions, integrating insights from financial innovation, blockchain security, and digital monetary policy. Building on the foundational design principles of central bank digital currencies [5], [9], and cross-border banking integration frameworks [1], the study analyzes how programmable money, distributed ledger technologies, and standardized APIs can reduce settlement latency, improve transparency, and lower operational risk in multi-jurisdictional payment corridors.

From a regulatory standpoint, the research explores harmonization challenges involving anti-money laundering (AML), Know-Your-Customer (KYC) protocols, and data sovereignty laws, as discussed in the literature on digital asset governance [10], [15]. It further considers the evolving roles of international institutions such as the IMF and BIS in setting cross-border standards [6], [8]. The proposed model introduces a hybrid CBDC interoperability architecture supported by blockchain-based messaging and AI-driven compliance monitoring [7], [18]. By aligning technical integration with regulatory coordination, this study highlights a pathway for achieving secure, transparent, and programmable cross-border CBDC transactions that balance innovation with monetary stability.