A new report published by the Bank of International Settlements (BIS) and a group of central banks assert that digital currency can foster faster settlements and cheaper transfers.
About two weeks ago, the head of the Bank of International Settlements (BIS) Innovation Hub, Benoît Cœuré, asserted that central banks must pick up the mandate and develop Central Bank-Issued Digital Currencies (CBDC). Cœuré opined that a digital currency Economy already exists and that central banks are lagging considering that “CBDCs will take years to be rolled out.”
Following these comments from the bank executive, the BIS, in collaboration with four central banks from the United Arab Emirates, Hong Kong, China, and Thailand, has initiated a digital currency experiment.
After producing and testing a prototype dubbed the “multiple central bank digital currency bridge project (mBridge),” the group published some interesting findings. Bénédicte Nolens, the head of the Hong Kong center of BIS Innovation Hub, explained that digital currencies can become more effective for the banking industry and would uplift the economy in general.
In a statement published on Monday, Nolens noted that: “Enabling faster and cheaper cross-border wholesale payments, including to jurisdictions that don’t benefit from a vibrant correspondent banking system, would be positive for trade and economic development.”
The bank revealed that the developers launched the mBridge prototype on Ethereum’s Hyperledger Besu blockchain.
Digital Currency Transaction on DLT 50% More Efficient than Normal Cross-Border Payments System
According to tests, distributed ledger technology (DLT) slashes the cost of cross-border transactions by 50%, and settlements get completed in seconds.
Meanwhile, the group has turned its attention to legal issues and jurisdictional hurdles in developing a “production-ready digital currency solution.” Interestingly, the mBridge project comes amid the looming launch of the digital Yuan, which is near completion.
The mBridge collaboration first got initiated by the Bank of Thailand and Hong Kong’s Monetary Authority under the alias “Project Inthanon-LionRock.”
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