Asian Banks Collaborate on Cross-Border CBDC Project
Global regulators continue to work on strategies in a bid to regulate their prospective crypto markets. One topic that continues to pop up even in regions that are averse to cryptos is CBDCs. In Asia, some major banks are planning to join hands to launch a pilot on the blockchain.
Apex Banks Look To Control Crypto Rise
Financial regulators from four Asian economies have announced that they intend to create cross-border central bank digital currencies (CBDCs) in the coming years.
The project rightly named the Multiple Central Bank Digital Currency (m-CBDC) is an ongoing partnership between four major Asian countries. The project aims to resolve challenges like the traditional cross-border payments system’s inefficiencies, high transaction cost, and complex regulatory guidelines. The body of regulators hopes to attract more apex banks to join in the study of blockchain technology.
The m-CBDC sees the Hong Kong Monetary Authority, the Bank of Thailand, the Central Bank of the United Arab Emirates, and the Digital Currency Initiative of the People’s Republic of China collaborate to develop a prototype leveraging blockchain technology.
The m-CBDC project builds upon the Inthanon-LionRock project set up in 2019 to facilitate cross-border payments. The new efforts will see the Asian nations further explore the potential of DLT by developing a proof-of-concept (PoC) prototype. The bridge project will also look to investigate “business use cases in a cross-border context using both domestic and foreign currencies.”
Pilot Tests Are Underway On CBDC
As Bitcoin prices rose up to $50K, global capital markets are seeing an outflow of funds into the crypto markets. Financial regulators are left in dire straits as digital assets continue to court attention and generate juicy returns for investors despite their associated risks.
In response, many countries have been on the march to create a digital version of their fiat currencies. Pilot programs launched in China and some parts of Europe have seen significant progress in this field. Although CBDCs do not address the inflationary question, world governments see it as a way to put a cap on cryptocurrencies’ rise.
While several developed countries are making progress, the world’s largest economy, the United States of America, has continued to drag its feet on the CBDC question. Although regulatory agencies like the Securities and Exchange Commission (SECC) and Commodity Futures Trading Commission (CFTC) have been doing their bit marshaling the crypto space, no official announcement has been made concerning a CBDC program.