The Bank for International Settlements (BIS) has published a report touting the benefits of central bank digital currencies (CBDC), especially in reducing the cost of cross-border payments.<\/p>\n
According to the report titled \u201cInthanon-LionRock to mBridge: Building a multi CBDC platform for international payments\u201d published on Tuesday, CBDCs can reduce the transaction throughput of cross-border payments from three to five business days to only a few seconds.<\/p>\n
The stated claim is part of the conclusions drawn from phase two of Project Inthanon-LionRock involving the central banks of China, the United Arab Emirates and the Hong Kong Monetary Authority.<\/p>\n
\u201cThe prototype demonstrates a substantial increase in cross-border transfer speed from days to seconds, as well as the potential to reduce several of the core cost components of correspondent banking,\u201d the report stated.<\/p>\n
As stated in the report, a PricewaterhouseCoopers estimate based on the results of the phase two prototype showed a possible 50% reduction in the cost of cross-border payments.<\/p>\n
The BIS report also stated that the speed and cost benefits of CBDCs can even be more significant among jurisdictions where robust correspondent banking relationships are non-existent.<\/p>\n
With phase two completed, the project now dubbed \u201cmCBDC Bridge\u201d will move into the third phase, which will involve further pilot studies as well as the creation of a possible roadmap for large-scale testing.<\/p>\n