The Bank for International Settlements (BIS) has released a paper promoting the advantages of central bank digital currency (CBDC), particularly in lowering cross-border payment costs, thereby improving international remittance speed.
CBDCs can reduce cross-border payment transaction throughput from three to five business days to just a few seconds, according to a research published on Tuesday titled “Inthanon-LionRock to mBridge: Building a multi CBDC platform for international payments.”
The assertion is part of the findings of Project Inthanon-second LionRock’s phase, which involved the central banks of China, the United Arab Emirates, and the Hong Kong Monetary Authority.
According to the paper, “the prototype exhibits a significant boost in cross-border transfer speed from days to seconds, as well as the ability to cut several major cost components of correspondent banking.”
According to the study, based on the results of the phase two prototype, PricewaterhouseCoopers estimated a possible 50% reduction in the cost of cross-border payments.
According to the BIS analysis, the benefits of CBDCs in terms of speed and cost are considerably greater in areas where strong correspondent banking connections are lacking.
After completing phase two, the project, now known as “mCBDC Bridge,” will move on to phase three, which will include more pilot studies and the establishment of a prospective roadmap for large-scale testing.
As the focus looks to be changing toward more collaboration in the domain of national digital currencies, the mCBDC Bridge project is one of many multi-central bank digital currency projects.
Australia, Malaysia, Singapore, and South Africa have announced a combined CBDC project, as previously reported by Cointelegraph.
These cooperative efforts are also being promoted by organizations like the BIS and the International Monetary Fund as being more beneficial to the present financial landscape, particularly in light of the rising popularity of cryptocurrencies.
Indeed, the BIS has long promoted CBDCs as a countermeasure to the spread of crypto and stablecoins in global payments.
