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"This paper offers a discussion on the challenges analysts, technicians, and interested members of the public face when discussing how interoperation in a payment system can support goals of efficiency, security, and accessibility. We deconstructed elements of the payment system and defined these elements to support a deeper analysis of where and how the term interoperation can be appropriately applied. The fit-for-purpose framework offers a simple, four-step approach to increasing the depth and clarity of discussions about payment system interoperability and how it may be used as a tool to support various goals. The approach focuses on defining the boundaries of a system within the context of the discussion, adopting common terminology, describing the degree of interoperation required, based on agreed-upon descriptions, and mapping the current state of existing structures (where applicable). Finally, we sketched preliminary results of a hypothetical discussion where participants used our framework to discuss the topic of interoperation with respect to how a potential CBDC and stablecoins could technically co-exist in payment systems."

"We identify four key dimensions of mobile payments interoperability. We find that the lack of interoperability may discourage entry and weaken competition. Without regulation, interoperability at the platform level may fail to emerge, even if it is welfare-improving, when a dominant player enjoys strong network externalities or when consumers can join several platforms. The intended pro-competitive effects of interoperability may be considerably weakened or even backfire if consumers face search costs or if fees are complex. Finally, interoperability of data creates a link between payments and other financial services, which may increase overall efficiency."

Stablecoins are good candidates for studying interoperability across blockchains because they are nonspeculative by design. Using stablecoins and bridged stablecoins, we examine the price relation between native and bridged USDC and USDT on multiple blockchains and bridges. In principle, a bridged representation of an asset ("bridged asset") represents value that is identical to the original asset. We provide evidence of limited interoperability by showing the divergence of prices of tokens represented on different platforms. Overall, the surprisingly high price variation across blockchains of stablecoins, which are intended to represent $1, points to broad violations in the singleness of money that are not observed for bank deposits. This suggests that limited interoperability contributes to price variation across stablecoins. See also Part 1: https://libertystreeteconomics.newyorkfed.org/2025/03/an-interoperability-framework-for-payment-systems/

The European Central Bank (ECB) published a collection of papers presented at the September 5-6, 2022 European System of Central Banks (ESCB) Legal Conference, including three on the legal aspects of central bank digital currency (CBDC) interoperability. A paper by Jess Cheng and Joseph Torregrossa discusses the concept of "legal interoperability" in the domestic payment system and its relevance to the retail CBDC context, particularly as the necessary legal foundation for transferability and convertibility. The second by Panagiotis Papapaschalis makes the case for exposing and overcoming technical and legal obstacles to interoperability ex-ante and early on, rather than trying to tackle them ex post, i.e. only when the various, diverging, CBDCs have gained momentum. The third paper, by Seraina Grünewald, focuses particularly on the prospects and challenges for the legal interoperability of a digital euro.

The Atlantic Council published an updated version of their "Standards And Interoperability: The Future Of The Global Financial System" white paper calling for calling for global interoperability standards around central bank digital currency (CBDC). It sets some common definitions and understanding of the current state of international standards for those seeking to understand the current state of international standards and existing gaps and areas for improvement. It also notes that, standards ensuring consistency and seamless functionality are not static; they must be flexible enough to accommodate advancements in digital currency technology, shifts in economic priorities, and changing societal perspectives on digital assets. https://digitaldollarproject.org/standards-and-interoperability-the-future-of-the-global-financial-system/

"cLabs (a company in the Celo ecosystem) acquired Summa, bringing on a talented team of leaders in cross-chain interoperability. This acquisition began the construction of a gas-efficient interoperability standard for cross-chain communication named Optics. The project is focused on enabling seamless interoperability between layer-one blockchains. This work is part of a broader set of projects, including Cosmos and Polkadot, that focus on developing a future vision for a connected world of blockchains."

The World Economic Forum published a governance framework that proposes strategic pathways which can enable interoperability between legacy IT systems and distributed ledger systems. It proposes ways to integrate legacy IT systems with the capabilities of smart contracts without replacing them. This interoperability between these two disparate systems can spawn a new wave of experiments and pilots towards adoption of smart contracts in various applications. It recommends that businesses join open-source communities that build interoperability frameworks.

The World Bank published a technical paper on on its practical experiments on fast payments system (FPS) interoperability with central bank digital currency (CBDC) systems. The first experiment investigated the option of settling FPS obligations in a wholesale CBDC system, including the option to reserve funds to guarantee the settlement of FPS net obligations. The second experiment investigated the interoperability between users within the FPS and retail CBDC users, including the transfer of funds among both types of users, using common services such as address resolution services. This experiment illustrated how CBDC systems could interoperate with retail payment systems through an interlinking bridge that was used to route messages and application programming interface (API) calls among different systems. The programmability features of distributed ledger technology (DLT) were used to link the settlement in CBDC to the transfer of funds in the FPS.

"Without access to central bank payment rails, non-bank stablecoins will be perceived (however large the HQLA buffers they may propose) to be less safe than bank stablecoins. As most stablecoins are in US dollars, the US has an opportunity to exploit its (relatively) late entry into the stablecoins discussion. Allowing stablecoins from banks and non-banks chartered as banks to interoperate - not just by enabling both to have access to central bank payment systems, but also by enabling the use of public, open-source technology protocols that already interoperate with each other - will make a difference in the payments/settlements landscape."

"In this post I covered why interoperability is growing in importance, broke down the main types of interoperability and gave a brief high-level introduction to some of the key projects that are working to make blockchains communicate as effectively as possible. Each approach that I went through carries a different set of capabilities and limitations."

R3 has rolled out a public beta of its Corda distributed ledger technology (DLT) platform that is capable of interoperating with other blockchain networks. Also, in partnership with Adhara, R3 has launched a Hyperledger Foundation Lab - Harmonia - to speed the development of interoperability protocols for regulated financial institutions, and  achieve true atomic settlement across blockchain networks.

"The achievement of policy aims associated with a CBDC will require adoption by end users. The user value proposition relies in large part on frictionless satisfaction of key payments use cases. The associated CBDC transactions necessitate interoperability along - and most crucially between - payment rails. Harmonization of data models, via international standardization efforts, is a necessary underpinning of effective interoperability."

Co-chain architecture ensure that you can enjoy the advantages of private chains and public chains at the same time. By making public and private blockchains interoperable, organizations can isolate and control sensitive data on a private blockchain, while still safely interact with the world at larger scale, through an interoperable public blockchain.

The GSMA Inclusive Tech Lab launched the Interoperability Test Platform, a joint test environment combining the GSMA Mobile Money API, a harmonised industry specification for all common mobile money use cases, and Mojaloop, an open source code, developed to accelerate financial inclusion through digital payments. The platform will provide the industry with an open-source and secure environment for ecosystem participants to test their systems across different use cases in an interoperable mobile money ecosystem.

"The Digital Tenge project is exploring different dimensions of such interoperability. From the creation of well-structured APIs to collaboration with international payment systems' networks, we are paving the way for a seamless experience. Excitingly, some of these innovations will be launched this November in production-grade mode. The team is also working on the development of an interoperability layer, allowing end-users to transact with CBDC within our network and with users outside the network."

"Alipay, Ant Group's third-party mobile payments platform, said it has achieved nationwide interoperability of QR payment codes with China UnionPay to meet regulatory requirements on interconnection and interoperability."

The European Central Bank (ECB) published the learning strategy and key performance indicators (KPIs) proposed for its exporatory work on new technologies for central bank money settlement of wholesale financial transactions. The work is focused on three interoperability-type solutions, (i) trigger (ii) TARGET Instant Payment System (TIPS) hash link, and (iii) full distributed ledger technology (DLT) interoperability. The first two solutions involve the market platform interoperating with the existing TIPs platform. Only the last one (full-DLT) involves what the rest of the world calls wholesale central bank digital currency (wCBDC), in which the payment instrument is DLT-based central bank money (CeBM).

Design options for interoperability and funds locking across digital pounds and central bank money (arXiv) arXiv published a paper by Barclays staff that analyzes the design options for supporting "functional consistency" across digital pounds and commercial bank money. It focuses on three key capabilities: communication between digital pound ecosystem participants, funds locking, and interoperability across digital pounds and commercial bank money. It explores them via three payments use cases: person-to-person push payment, merchant-initiated request to pay, and lock funds and pay on physical delivery. It then presents and evaluates the suitability of design options to provide the specific capabilities for each use case and draw initial insights. The paper concludes that a financial market infrastructure (FMI) providing specific capabilities could simplify the experience of ecosystem participants, simplify the operating platforms for both the Bank of England and digital pound payment interface providers (PIPs), and facilitate the creation of innovative services.

The Central Bank of the States of West Africa (BCEAO) has launched the pilot phase of the interoperable instant payment system (IPS) of the West African Economic and Monetary Union (UEMOA). 25 financial institutions across four countries met the criteria required to participate. A second group will join the pilot on August 12, 2024.The new interoperable 24/7 IPS infrastructure is capable of processing transactions of any kind, regardless of the account type.

As CBDCs emerge as a major disruptor to existing infrastructure, interoperability remains one of the most significant roadblocks to their functionality. Although most financial institutions remained wary of digital currencies, payment players like Visa, Mastercard and PayPal have not only accepted the concept of cryptocurrencies and CBDCs but are constantly innovating on both fronts. The future could see them carving out a new niche for themselves - as the interoperability layer for the upcoming CBDC world.