The Bank for International Settlements (BIS) published a report titled “Inthanon-LionRock to mBridge: Building a multi CBDC platform for international payments” specifying the benefits of Central Bank Digital Currencies (CBDC).
The BIS, in its report, has mentioned that the CBDCs used for facilitating the payments could take less time for the cross-border transaction and also reduce its costs.
According to the reports, the central banks of China, the United Arab Emirates and the Hong Kong Monetary Authority have been part of the Project Inthanon-LionRock. Soon after the completion of the second phase of this project, the countries in their report concluded the fact published recently by the BIS.
The report stated, “The prototype demonstrates a substantial increase in cross-border transfer speed from days to seconds, as well as the potential to reduce several of the core cost components of correspondent banking.”
Phase two of the pilot program has shown that around 50 percent of the cost was reduced during the cross-border payments.
Further, it has been added that the CBDCs transactions could be more helpful in those jurisdictions where strong correspondent banking relationships are non-existent.
After the completion of the second phase, now, the project is referred to as “mCBDC Bridge”, which is going to enter its third phase.
In the third phase of this pilot project, the developers will explore more about CBDC and this would help them in creating a possible roadmap for large-scale testing.
Notably, mCBDC Bridge is a collaboration of multiple central bank digital currency projects. In the future, the authorities are hoping to add more national digital currencies to explore more benefits of CBDC.
A report published earlier had notified that four countries, including Australia, Singapore and South Africa, had come together for a joint CBDC initiative.
Apart from BIS, the International Monetary Fund (IMF) has also lent its support to these kinds of collaborative projects, as it could be beneficial for the current financial landscape, amid the growing popularity of cryptocurrencies.
In today’s time, when cryptocurrencies and stablecoins have been so popular in the global market, the BIS is consistently supporting CBDCs as their countermeasures.