Problem Statements

In this year's G20 TechSprint, solutions are called for making multilateral cross-border payments efficient. The specific focus is on technology solutions that can be added to multilateral payment platforms, including multiple CBDC platforms, to reduce illicit finance risk and FX and liquidity risks and to foster interoperability. Through this focus the G20 TechSprint intends to provide significant contributions to the G20 priority of making cross-border payments faster, cheaper and more transparent.

A. AML/CFT/Sanctions technology solutions to reduce illicit finance risk

Multilateral cross-border payment platforms, including multiple CBDC platforms, could face reputational risk if they are used for payments related to money laundering, terrorist financing or potential sanctions evasion.

Accordingly, we call for AML/CFT/Sanctions technology solutions that can be integrated into such multilateral platforms to reduce illicit finance risk, increasing efficiency in AML/CFT/Sanctions screening processes, while ensuring a given level of confidentiality between participants and platform operators. For reference, this could include digital identity solutions, KYC/AML/CFT/Sanctions utilities, zero knowledge proofs (ZKP), black/ white-listing, automated screening combined with alerts to participants and other technology solutions. These solutions in turn can be developed using technologies such as data analytics, machine learning, artificial intelligence, network analytics, federated learning, blockchain, smart contracts and/or other technologies.

B. FX and liquidity technology solutions to enable settlement in more emerging market and developing economy (EMDE) currencies

Due to the risk of unexpected volatility in FX rates, FX and liquidity risks can make it more challenging to operate multilateral platforms relative to domestic systems, particularly if the platform processes multiple currencies. To mitigate these risks, a multilateral platform may opt to settle in a few liquid currencies or mandate participants to fully pre-fund their accounts or choose to settle on a deferred net basis. However, these choices could limit the usability of such platforms.

Accordingly, we call for FX and cross-currency liquidity technology solutions that can be integrated into multilateral platforms, including multiple CBDC platforms, to enable competitive pricing, and to settle payments in a larger number of currencies, including in EMDE currencies, on a real time basis with reduced liquidity demands. For reference, this could include liquidity optimisation, liquidity bridges, limit order books, among others. Technology solutions can be combined with data analytics, predictive machine learning tools, smart contract and other technologies.

C. Technology solutions for multilateral cross-border CBDC platforms

This problem statement calls for solutions and technologies that participants believe offer promise with regard to multilateral cross-border CBDC platforms. This problem statement is intentionally kept broad to encourage participants to present the most promising technology solutions in the context of multilateral cross-border CBDC platform development.

For reference, it could include technologies that can contribute to interoperability across multi-CBDC platforms or their interoperability with domestic payment systems, solutions that pursue data standardization to facilitate interoperability and application programming interfaces (APIs). Other ideas may concern digitised governance and voting solutions, embedded supervision, privacy technologies and cyber security solutions for multilateral cross-border CBDC platforms, while ensuring operational resiliency.