The report claims that a “comprehensive mCBDC network” can save $100 billion annually
Many powerful stakeholders are eager to reduce expensive cross-border remittance fees. In this case, the International Monetary Fund pointed out that more than 100 countries are studying the development of CBDC.
Recently, together with the BIS Innovation Center, the Bank of Thailand, the Central Bank of the UAE, the People’s Bank of China [Digital Currency Research Institute] and the Hong Kong Monetary Authority are cooperating to develop a multi-CBDC platform or bridge for international remittances.
A report shared by the Bank of Thailand revealed the latest progress of the plan.
In all the use cases of the mBridge project, the report believes that “international trade settlement” is a priority. The reason for this is that, according to reports, the total value of participating countries or regions in international trade transactions exceeds 730 billion U.S. dollars . At the same time, the report pointed out that the project participants have used about hundreds of millions of dollars on the mBridge platform.
The report states that “a total of 22 private sector participants from four participating countries or regions have identified 15 potential business use cases.”
The Bank of Thailand conceived its own use case for the mBridge project. Its official document emphasizes the importance of seamless payment channels with China, and envisages that “a Thai trading company uses a letter of credit to purchase raw materials from a Chinese supplier and uses mBridge to make cross-border payments. The Thai trading company assembles and sends to Hong Kong customers Export the final product and receive payment through mBridge.”
Although the mBridge is currently in the experimental stage, it is reported that it will start piloting next year .
In addition, in a speech on November 4th, BIS General Manager Agustín Carstens talked about the mBridge project and pointed out, “…In the most recent phase of the project, we investigated whether the new DLT cross-border payment network can reduce costs and increase cross-border payments. Payment speed. The answer is yes. The speed of cross-border transmission has been greatly increased from multiple days to seconds. Secondly, the cost for users to perform such operations can also be reduced by half.”
To this end, a report jointly issued by JP Morgan Chase and Oliver Wyman Consulting shows that the use of a multi-currency or multi-currency central bank digital currency called mCBDC can save corresponding funds.
It is not easy to unite international central banks to create and test a CBDC remittance platform in various currencies, and it is expensive, which can be said to be a feat. Therefore, the cost savings must justify the input cost.
” A comprehensive mCBDC network can facilitate 24/7 real-time cross-border payment and foreign exchange PvP settlement, saving nearly 100 billion US dollars for global enterprises every year .”
The report pointed out that the cross-border transaction flow in 2020 is about 23.5 trillion U.S. dollars. However, if foreign exchange fees are not included, the cost of these transactions is approximately US$120 billion.
The report points out that this cost is approximately one-third of Singapore’s GDP. And not only the price is high, but also the time-consuming is relatively long. The average settlement time is about two to three days.
And mCBDC can reduce the cost by 80%.
While China has made progress in CBDC, ASEAN economies are also making attempts and efforts in related areas .
The report pointed out that “ASEAN economies have also shown to promote cross-border payment innovation, such as the development of the Jasper-Ubin project, the Inthanon-LionRock project, the mCBDC bridge and the Dunbar project, etc., and are also promoting regional integration, such as regional comprehensive economic partnerships. The relationship provides a strong motivation.”
However, the figures shown in the report are not guaranteed. In fact, the report indicates that some and all of the mCBDC bridge network may be formed in the future .
At the same time, the report compares existing systems including Ripple and SWIFT. Although SWIFT ranks first among blockchain companies in terms of transparency, Ripple is clearly a winner in terms of instant settlement. The two are more or less the same in terms of low cost, but the volatility of XRP is considered a problem.
However, it is worth noting that FNALITY and its “quasi-CBDC network” have performed very well in these three areas.
In an episode of the Thinking Crypto podcast, former CFTC chairman Chris Giancarlo pointed out that the popularity of stablecoins may be one reason CBDC has attracted much attention.
Chris Giancarlo said, “I believe that central banks are paying attention to CBDC because of the amazing rise of stablecoins. In the past 18 months, the emergence of stablecoins as an international payment and settlement mechanism has plunged central banks into what is called a battle or The moment of escape.”
The original text comes from ambcrypto, compiled and compiled by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.
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