Faster and Cheaper Cross-Border Transfers” – Bank Report Led by BIS Highlights Benefits of Cryptocurrency –

Digital currencies can lead to faster settlements and cheaper transfers, according to a report from the Bank for International Settlements (BIS) and a group of central banks. In addition, the banking group has deployed a prototype that shows how money transfers can be made in seconds with very low processing fees.

Low-cost transfers and speed: Bank for International Settlements report says digital currencies can be more effective

In the second week of September, the head of the Innovation Hub at the Bank for International Settlements (BIS), Benoît Cœuré, explained that central banks need to act quickly to develop central bank digital currencies. Cœuré emphasized that a digital currency economy already exists and that “CBDCs take years to launch.” According to Cœuré's statements, the BIS is launching a digital currency experiment together with four central banks from the United Arab Emirates, Hong Kong, China and Thailand.

The banking group created a prototype and released a report detailing the group's findings after testing the “Multiple Central Bank Digital Currency Bridge Project (mBridge).” Bénédicte Nolens, head of the Hong Kong center of the BIS Innovation Hub, explained that digital currencies can be more effective for the banking system and would be beneficial for the economy in general.

“Enabling faster and cheaper cross-border wholesale payments, even in jurisdictions that do not benefit from a dynamic correspondent banking system, would be positive for trade and economic development,” Nolens said in a opinion published on Monday. The prototype used by BIS researchers and collaborating central banks was built on Ethereum's Hyperledger Besu blockchain.

Banking group plans to continue prototype research for distributed ledger technology until a “production-ready” solution is created

Tests have shown that distributed ledger technology (DLT) reduces the cost of cross-border exchanges by half and the settlement speed is just a few seconds. The report states that the mBridge team is committed to continuing to work on DLT. The group plans to address legal issues and jurisdictional hurdles to develop a “production-ready digital currency solution.” The mBridge project is being developed in the heart of China and is preparing to launch the digital yuan as the CBDC nears completion.

The mBridge collaboration was previously called “Project Inthanon-LionRock” and was launched by the Bank of Thailand and the Hong Kong Monetary Authority. The two banks released joint research in 2020 after testing a range of technologies. The report notes that the DLT model research involved ten smaller bank branches from two different locations.

What do you think about the BIS and the four central banks saying that digital currency transactions are faster and cheaper? What do you think of the mBridge DLT prototype? Let us know your thoughts on this topic in the comments below.

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