Australia, Singapore and South Africa to test cross border central bank digital payments
Central banks in Australia, Singapore, Malaysia and South
Africa will conduct a cross border payments trial using different central bank
digital currencies (CBDC) to assess if this allows transactions to be settled
more cheaply and easily, the banks said on Thursday.
Many governments and central banks around the world are
exploring the use of CBDCs, which are digital forms of existing currencies.
Some, like China, are trialing retail-focused CBDCs designed to replicate cash
in circulation, while others are considering using so-called wholesale CBDCs to
improve the internal workings of their financial systems.
Most projects are still in the early stages and are
domestically focused, but developing global rules and frameworks for how CBDCs
can be used internationally is complicated technically, and potentially
politically.
This latest project aims to develop prototype shared
platforms for cross-border transactions using multiple CBDCs, said the
statement from the Reserve Bank of Australia, Bank Negara Malaysia, the
Monetary Authority of Singapore, the South African Reserve Bank, and the Bank
of International Settlement’s Innovation Hub, which is leading the scheme.
These platforms would enable financial institutions to
transact directly with each other in CBDCs, which could eliminate the need for
intermediaries and reduce the time and cost of transactions.
The initiative will also explore different technical,
governance and operating designs.
“The multi-CBDC shared platform … has the potential to
leapfrog the legacy payment arrangements and serve as a foundation for a more
efficient international settlement platform,” Assistant Governor Fraziali
Ismail, Bank Negara Malaysia said in the statement.
A separate BIS-led project exploring using CBDCs for cross
border payments is also underway involving central banks from China, Hong Kong,
Thailand and the UAE.
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