- PBC joins three other central banks to pilot a cross-border digital currency.
- The multilateral project is aimed at promoting the use of CBDC for cross-border transactions via blockchain.
The People’s Bank of China (PBC), which is currently testing its retail digital yuan, has reportedly set out with other central banks to explore a potential cross-border digital currency. This multilateral CBCD project with PBC’s digital currency institute precisely includes the central banks of Hong Kong, Thailand, and the United Arab Emirates (UAE). The project will equally help other Asian central banks to improve their financial infrastructure for cross-border payments.
PBC joins a multilateral cross-border digital currency project
Reportedly, the cross-border digital currency project named “m-CBDC Bridge” was initially conceived and will be headed by the central bank of Thailand and Hong Kong. The main objective is to explore a potential central bank digital currency to improve cross-border transactions. With the PBC and UAE Central Bank on board, the four institutions will study the application of blockchain technology to promote cross-border digital currency transactions.
As part of the project, the central banks will research a payment-versus-payment settlement of cross-border transactions of the CBDC. They will also explore how to facilitate foreign and domestic currency exchanges in cross-border trade scenarios using the distributed ledger technology. The central banks also mentioned that the cross-border digital currency project would help other central banks in Asia to facilitate better transactions.
“It will further build a favorable environment for more central banks in Asia and other regions to jointly study and improve the cross-border payment capabilities of the financial infrastructure to solve the problems of low efficiency, high costs, and low transparency in cross-border payments,” the Chinese central bank noted.
Blockchain is modifying the banking system
Blockchain technology has proven useful in the banking system, especially for cross-border transactions. Last year, Cryptopolitan reported that an Islamic bank in Abu Dhabi city in UAE successfully completed a blockchain cross-border transaction, becoming the first Islamic bank to achieve this milestone.