Four Major Central Banks Conducting Cross-Border CBDC Payment Trials
In the latest report on Thursday, September 2, Reuters noted that four major central banks will be conducting cross-border CBDC payment trials. This includes the central banks of Australia, Singapore, Malaysia, and South Africa.
The pilot projects from these four central banks will determine whether if CBDC transaction settlements are easier and cheaper. Governments and economies across the globe have accelerated their work on central bank digital currencies (CBDC).
Top economies like China have already accelerated their CBDC developments in the market. Besides, China has also started the cross-border testing of its Digital Yuan with Hong Kong.
All these developments are currently in the primary stage. But it certainly highlights the upcoming shift in the global payments infrastructure. However, the technical implementation and use of CBDCs on the world map need to be verified and tested.
In this latest experiment, these four leading central banks will be testing the CBDC cross-border payments with their respective national currencies. Leading the scheme is the Innovation Hub of the Bank of International Settlements (BIS), reported Reuters.
The Benefits of Using CBDCs
The latest project of the four central banks involves building prototype shared platforms for doing cross-border payments using multiple CBDCs. Thus, financial institutions will be able to transact directly with each other in CBDCs without needing any intermediaries. It would further reduce the cost and time of transactions.
As part of the test, all four central banks will explore different governance, technical, and operating designs. Speaking of the development, Assistant Governor Fraziali Ismail, Bank Negara Malaysia said:
“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”.
As said, in a similar BIS-led project, the Chinese central bank PBoC is testing cross-border payments with central banks of Hong Kong, Thailand, and the UAE.Source