Central bank digital currencies (CBDCs) can put a gash on the time for cross border payments to seconds from days, the Bank of International Settlements (BIS) said.
The trial showed cross border transactions could be made in a few seconds because CBDCs help skirt complicated arrangements under which payments are passed via a network of banks. It will also reduce costs by up to 50 per cent,
But the process has become long and complicated with banks cutting ties with potentially risky partners and withdrawing from some markets due to compliance and cost reasons.
Many governments and central banks around the world are exploring the use of CBDCs. The BIS-backed pilot scheme used blockchain to synchronize transaction data across participants in the payment chain.
The project has since expanded to include China and the UAE’s central banks, and is now known as the “mBridge”.
Source: The Daily Star