Bitcoin is the worst option for increasing the efficiency of cross-border payments while stablecoins occupy an intermediary position, the European Central Bank (ECB) said in a study published Monday.

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Fast facts

• Central bank digital currencies (CBDCs) and domestic instant payment systems have the highest potential for making cross-border transactions cheap and immediate, the study said.

• Bitcoin cannot solve the challenges of cross-border payments because of its inefficient proof-of-work consensus mechanism, its high volatility, and its use by criminals, the study said.

• Stablecoins, on the other hand, pose risks to monetary sovereignty and financial stability in addition to concerns around illicit use, according to the study.

• Central banks developing CBDCs should discuss interoperability issues at an early stage to ensure the efficiency of cross-border transactions, the study said.

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