Currency board countries: Stablecoins, Central Bank Digital Currencies, and Cross-Border Payments: A New Look at the International Monetary System

The third risk is to the interoperability of eMoney and thus to market contestability . We noted earlier the strong network effects in payments. If eMoney issued by different providers is not interoperable, only the largest providers will survive. The fat cats will eat the nimble and potentially more innovative mice. Even regulation mandating common technological standards will not resolve the issue. It was easier to get cell phones from different providers to talk to each other. In the case of eMoney, interoperability requires a common settlement platform — a way to seamlessly, cheaply, and securely transfer funds between trust accounts. You will not be able to redeem the eMoney I send you for fiat currency unless a corresponding amount of fiat currency is transferred from my provider’s trust account to yours.

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