Bank of International Settlements unveils the benefits of mCBDCs

Bank of International Settlements unveils the benefits of mCBDCs

BUSINESS/ECONOMY | Sep 28, 2021 | WOZINGA NEWS

Bank of International Settlements unveils the benefits of mCBDCs

  • Bank of International Settlements disclosed the result of using a common prototype platform for mCBDC settlements. 

     

By Marielle Petere Wozinga Staff

Bank of International Settlements unveils the benefits of mCBDCs

Bank of International Settlements has unfolded the advantages of multiple Central Bank Digital Currencies. 

It showed that digital currencies and distributed ledger technology could provide real-time, low-cost, and secured cross-border transactions.

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Based on a press release, BIS revealed today the outcome of using a common prototype platform for mCBDC settlements. 

It cited that it could take only seconds for the completion of international transfers and foreign exchange operations.

Additionally, the operation cost is lower. It is 50 percent lesser than the cost of the commercial banks. 

In the case of the prototype platform for mCBDC, it could operate 24/7. So the transaction in just a short period is possible. 

By considering the duration and completion of transactions in any commercial bank, usually takes several days. 

BIS even pointed out the operational inefficiencies, complexity, and fragmented arrangements and networks of the banks. 

The different time zones become the reason for having varied operating hours of national payment systems. 

Moreover, the release discussed the financial institutions in the network of banks. It involves the repetition of investigation.

For this matter, it is a requirement in traditional banks as an assurance to avoid money laundering, tax evasion, and terrorism financing.     

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Now the test for the mBridge project with the mCBDC platform has proved the possible benefits. 

The project is the collaboration of BIS Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority. Besides, there are other correspondent banks for the mBridge. 

These are the Bank of Thailand, the Central Bank of the United Arab Emirates, and the Digital Currency Institute of the People’s Bank of China. 

Currently, the project phase leads to a broader geographic and various currencies. In this regard, the testing implementation of the e-CNY pilot in China helped the project. 

As for the Central Bank of UAE, it develops a single-currency blockchain solution. It is Project Aber. 

Still, the mBridge keeps on exploring the existing limitations on the platform. These are privacy controls, liquidity management, scalability, and the DLT process in a huge transaction. 

Do you agree with the idea of implementing mCBDC across the globe?

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