A trial for the feasibility of the use of a cross border payments system using different central bank digital currencies (CBDC) will be conducted by central banks in Australia, Singapore, Malaysia and South Africa.
The central banks said that the aim of this trial is to assess whether this new system is able to allow transactions to be settled more cheaply and easily.
The potential use of CBDCs, the digital forms of existing currencies, is being explored by many governments and central banks around the world. There are some central banks such as that of China, that are trying out CBDCs that are focused on its retail use, aimed to replace cash transactions with it, while other central banks are working on developing use of the so-called wholesale CBDCs for improving the internal functioning of their financial systems.
Most of the CBDC projects are still in their initial stages and focused primarily on the domestic market. However, development of rules and frameworks for the manner in in which CBDCs can be used internationally is considered to be technically complicate as well as politically touchy,
The statement issued by the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, the South African Reserve Bank, and the Bank of International Settlement's Innovation Hub, which is leading the scheme, the development of prototype shared platforms that allows cross border transactions using multiple CBDCs is the aim of the latest project.
The use of these platforms will enable direct financial transactions for transactions with each other in CBDCs. If this is effort is successful, it would nullify the need for intermediaries in cross border transactions as well as reduce the transaction time and costs.
The banks said this latest initiative will also examine the different technical, governance and operating designs.
“The multi-CBDC shared platform ... has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform," Assistant Governor Fraziali Ismail, Bank Negara Malaysia said in the statement.
The central banks from China, Hong Kong, Thailand and the United Arab Emirates are currently also engaged in development and use of a separate BIS-led project that also is aimed to explore the possibility of using CBDCs for cross border payments.
(Source:www.businessinsider.com)
The central banks said that the aim of this trial is to assess whether this new system is able to allow transactions to be settled more cheaply and easily.
The potential use of CBDCs, the digital forms of existing currencies, is being explored by many governments and central banks around the world. There are some central banks such as that of China, that are trying out CBDCs that are focused on its retail use, aimed to replace cash transactions with it, while other central banks are working on developing use of the so-called wholesale CBDCs for improving the internal functioning of their financial systems.
Most of the CBDC projects are still in their initial stages and focused primarily on the domestic market. However, development of rules and frameworks for the manner in in which CBDCs can be used internationally is considered to be technically complicate as well as politically touchy,
The statement issued by the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, the South African Reserve Bank, and the Bank of International Settlement's Innovation Hub, which is leading the scheme, the development of prototype shared platforms that allows cross border transactions using multiple CBDCs is the aim of the latest project.
The use of these platforms will enable direct financial transactions for transactions with each other in CBDCs. If this is effort is successful, it would nullify the need for intermediaries in cross border transactions as well as reduce the transaction time and costs.
The banks said this latest initiative will also examine the different technical, governance and operating designs.
“The multi-CBDC shared platform ... has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform," Assistant Governor Fraziali Ismail, Bank Negara Malaysia said in the statement.
The central banks from China, Hong Kong, Thailand and the United Arab Emirates are currently also engaged in development and use of a separate BIS-led project that also is aimed to explore the possibility of using CBDCs for cross border payments.
(Source:www.businessinsider.com)