News

The British, Canadian and Singaporean Central Banks Suggest CBDCs for International Payments

Digital currency has been cited as a solution by the reserve banks of Canada, Singapore and the United Kingdom that can be implemented to help with the challenges that are usually encountered when making international payments.

The Convenience of Using CBDCs for Cross-Border Payments

The report by the Bank of England, Monetary Authority of Singapore and Bank of Canada states that Central Bank Digital Currencies (CBDCs), which can either be retail CBDCs or Wholesale-CBDCs (W-CBDCs), has several benefits. These benefits include its all-rounder availability, anonymity, and its eradication of counterparty credit risk for participants.
Commercial banks such as United Overseas Bank, HSBC, Toronto-Dominion Bank, and Oversea-Chinese Banking Corporation made inputs on the report which outlines three models of W-CBDCs that can be implemented with geographical reach or acceptability categorizations.
The first W-CBDC model is specific to a particular currency and can be transmitted and exchanged within the nation, and not to other countries. Basically, this would mean that the Central Banks would offer the wallets for the W-CBDC in the country’s currency. Wallets would be opened with the central banks by commercial banks while the reserve banks would issue the currencies they wish to hold.
The British, Canadian and Singaporean Central Banks CBDCs International Payments
The second W-CBDC model will be a currency-specific one, and would be transmittable and exchangeable beyond the domestic jurisdictions. Each central bank would be required to offer support to multiple W-CBDC tokens if this model is adopted. Also, multiple wallets would be opened by commercial banks with their local central banks.
The third model involves a singular W-CBDC which would be backed by different currencies and would be transmittable and exchanged in all the participating nations. The problem with the last model, however, was noted in the report below;

“…because it requires backing by a basket of currencies, the W-CBDC in this model is subject to volatility, potential manipulation and investment activity. Additionally, our analysis indicates that the pace of adoption could be hampered by the complexity of adding new currencies into the basket backing the W-CBDC.”

Intentions Behind the CBDCs Suggestion

The report finally concludes that problems plaguing international payments such as poor availability, fragmented standards and having to go through multiple intermediaries will be solved by changing from the use of current corresponding banking channels in making these international payments.
Currently, the report states that the global value of both retail and international corporate payments is projected to grow by 5.5% each year to reach figures of about $30 trillion in 2022, from a value of $22 trillion in 2016.
The mutual report was titled, ‘Cross-border interbank payments and settlements: Emerging opportunities for digital transformation,’ and it was drawn from CBDC initiatives that the Bank of Canada and the Monetary Authority of Singapore have previously carried out with  Project Jasper and Project Ubin respectively.

Related posts
BitcoinBitcoin NewsbtcusdBTCUSDCBTCUSDTETFNewsxbtusd

Bitcoin May Never Go Below $50k Once An ETF Is Approved, Declares On-Chain Analyst

Bitcoin may never drop below $50k asserts on-chain analyst Ki-Young Ju. But as usual, there are conditions that follow this possibility. In a tweet, Ju analyzed that Bitcoin could follow the same path that gold took in 2004 when the first…
BitcoinBitcoin NewsbtcusdBTCUSDCBTCUSDTNewsxbtusd

Quarterback Star Tom Brady Breaks Internet After Showing Interest In Bitcoin

Tom Brady, the American athlete who is widely regarded as the “greatest” quarterback in NFL history is the latest celebrity to show interest in the world’s most valued cryptocurrency Bitcoin. Brady who has a massive Twitter following of 1.9 million…
BitcoinBitcoin NewsbtcusdBTCUSDCBTCUSDTNewsxbtusd

Almost $200 Billion Worth Of Bitcoin Is Currently At Risk – Report Warns

A recently published 2021 crypto report by Opimas LLC, a finance-based management consultancy firm, has revealed that approximately 3,480,000 out of the world’s mined 18.5 million Bitcoin, stands vulnerable to attacks as a result of improper safekeeping. The 36-page report…