Digital currencies of the central bank can shorten the time for cross -border payments - biz

The process showed that cross -border transactions could be carried out in a few seconds instead of three to five days, since CBDCs help to avoid complicated agreements in which payments are handled via a network of banks, the BIZ shared in a report on Tuesday.

CBDCs also contributed to reducing the costs by up to 50 %.

Typically, global banks without a network lead payments there via a local bank that acts in its name.

The process has become lengthy and complicated, since banks cancel connections to potentially risky partners for compliance and cost reasons and withdraw from some markets.

"Faster and cheaper cross -border large trade payments possible, even in jurisdictions that do not benefit from a dynamic correspondence banking system, would be positive for trade and economic development," said Benedicte Nolens, head of the to innovation Hub, Hong Kong Center.

Many governments and central banks around the world check the use of CBDCs. Some, such as China, test retail-oriented CBDCs that are supposed to reproduce the cash circulation, while others are considering using so-called wholesale CBDCs to improve the internal functioning of their financial systems or cross-border financial streams.

The pilot project supported by the BIZ, in which the central banks of Hong Kong and Thailand were initially involved, used Blockchain to synchronize transaction data between the participants in the payment chain.

It helped to reduce the costs by up to half by reducing some liquidity management, compliance and foreign exchange deals, the BIZ said in its report.

The project has now expanded to China and the Central Banks of the VAE and is now known as "Mbridge".

The next steps, according to the report, include the "development of the prototype into a series tire solution".

A look at all business events of today can be found in our economic calendar.

(Reporting of Alun John; Editor of Himani Sarkar)