China is soon going to release e-CNY, their official digital currency issued by the central bank. The currency is not mere token. The monetary authority or some private players maintain credit-debit accounts. These accounts must be identified to prevent fraudulent transactions. How to share these identities across the borders? Can the central banks of another country do it? Will it be acceptable?

One way to solve this is to have compatibility of technical and regulatory standards between the two countries. Secondly, there could be interfaces of their systems. Here there are no middlemen. Thirdly, many countries can come together on one platform to manage their digital currencies. These approaches involve identify establishment but that happens at the national level.

Another way is to have a jointly operated payment system. This system supports diverse digital currencies.

To facilitate exchange, a competent national authority must verify you as an individual and your balance amount. The country accepting foreign digital currency approves the transaction since it already is satisfied by the anti-money laundering standards of the issuing country. Thus two wallets in two different currencies can settle their accounts without telling each other more about the clients identity.

In the absence of suitable systems, the digital currencies will operate in silos, and these will be non-starters. It may so happen that one country’s digital cash is more preferred at some places than others.