- CBDC pilots demonstrate capability to sidestep complicated existing arrangements and reduce transaction time.
- Central bank institutions in Hong Kong, Thailand, China and UAE operating under the Bank of International Settlements are involved in the pilot scheme.
- Countries like China focus on replicating cash circulation through CBDCs.
The outcome of recent Central Bank Digital Currency (CBDC) pilots shows slashed cost and reduced transaction time. Cryptocurrencies currently utilized for making cross-border settlements, Ripple (XRP) and Stellar Lumens (XLM), are likely to face stiff competition from CBDCs.
CBDC pilot by Bank of International Settlements slashes transaction fees by 50%
Central banks worldwide are exploring the idea of a digital currency issued centrally in lieu of keeping up with technological development.
Several financial institutions have adopted Ripple’s real-time gross settlement system, which uses XRP as its native asset, over the years to reduce costs and time involved in moving funds cross-border. Ripple established a series of partnerships and collaborations, boosting the practical utility of XRP.
Competitor XLM, the native cryptocurrency for Stellar, an open-source blockchain payment system, solves the same problem.
In July the Bank of International Settlements released a blueprint of its instant cross-border payments solutions, Nexus. Though traditional banks have found Ripple’s solution helpful, Nexus will challenge payments giants by connecting regular instant payment systems (ISPs) across various jurisdictions.
Earlier today, BIS tweeted about the success of its successful pilot run
The common prototype platform for #mCBDC settlements tested by #BISInnovationHub and its partners completed international transfers and foreign exchange operations in seconds, compared with the usual several days https://t.co/OTSYc9I43A pic.twitter.com/bN0Y2gID0a
— Bank for International Settlements (@BIS_org) September 28, 2021
