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Central bank digital currency (CBDC) is a form of digital money that is issued, backed, and controlled by a country’s central bank. CBDCs have been developed in two main forms.

Cross-border money transfers usually flow through a correspondent banking network that consists of chains of banks, cooperatively working to transfer funds from the payer to the payee. However, this model is problematic, as it adds extra time and cost to money transfers, and demands a lot of operational effort on the banks’ side.

Correspondent banking is defined as “agreements or contractual relationships between banks to provide payment services for each other”.

The word ‘remittance’, originally coined by the World Bank, refers to the sum of personal money and compensation transfers of migrant workers to their home country, usually for household maintenance purposes.