The central banks of Australia, Singapore, Malaysia and the Republic of South Africa have begun testing the use of nationally issued digital currencies in cross-border payments. The trial is led by the Bank for International Settlements to determine whether they can simplify transactions and reduce transaction costs.
The Reserve Bank of Australia cooperates with counterparts in Asia-Pacific and Africa on CBDC projects
Although many countries are still testing their central bank digital currencies (CBDC) In domestic applications, some are preparing for international experiments. The Reserve Bank of Australia, the National Bank of Malaysia, the Monetary Authority of Singapore and the Reserve Bank of South Africa have jointly conducted cross-border trials.
These agencies stated in a statement cited by Reuters that the cooperation aims to develop a shared platform for cross-border transactions using different CBDCs. The program is led by the Bank for International Settlements (BIS) Innovation Center. Fraziali Ismail, Assistant Governor of Bank Negara Malaysia, was quoted as saying:
Multi-CBDC sharing platform…It is possible to go beyond traditional payment arrangements and lay the foundation for a more efficient international settlement platform.
The report details that the prototype platform should enable financial institutions to directly trade with each other using sovereign digital currencies. This approach will enable them to eliminate the need for intermediaries. Transaction time and costs are also expected to be reduced. Participants will explore various designs in terms of technology, governance and operations.
This is not the first such experiment. BIS Innovation Center Lead another project involving the central banks of China, Hong Kong, Thailand and the United Arab Emirates. In June, the Bank of France and the Swiss National Bank Announce Cooperate with the center to try out wholesale digital currencies in cross-border settlement. In July, the International Monetary Fund, the World Bank and the Bank for International Settlements Respected Countries cooperate on CBDC to strengthen cross-border payments.
Earlier this year, the Hong Kong financial authority roll out The second round of testing of the national digital currency issued by the People’s Bank of China is arguably the most advanced CBDC project.The Chinese Special Administrative Region revealed that it will connect the domestic payment system to the mainland payment system Digital element Network to evaluate the usability of currency in cross-border scenarios.
Do you think that central bank digital currency will challenge the current international payment system? Share your thoughts on this topic in the comments section below.
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