Asian Central Banks Pilot International Settlements With CBDC
The central banks of four countries in Asia have conducted
trials with international settlements using state-issued digital currencies known as CBDC.
Cross-border payments and foreign exchange transactions totaling over USD 22
million were part of the pilot project with the participation of the Bank for
International Settlements.
Trial Cross-Border
Transactions with Digital Currencies
The central banks of China, Hong Kong, Thailand, and the United
Arab Emirates have conducted a trial of cross-border payments with digital
currencies. The successful completion of the pilot testing was announced by the Bank
for International Settlement (BIS) Innovation Hub Hong Kong Centre.
The tests were conducted between Aug. 15 and Sept. 23 and
covered real-value transactions. They were processed through a distributed
ledger platform called Mbridge, a payment project initiated by the Hong Kong
Monetary Authority, the Bank of Thailand, and the BIS Innovation Hub. The
People’s Bank of China and the Central Bank of the UAE joined in 2021.
20 commercial banks used the platform to settle various kinds of
payments for corporate customers during the trial, mainly in cross-border
trade, the BIS explained in a post on LinkedIn. "Over USD 12 million in
value was issued onto the platform, facilitating over 160 cross-border payments
and FX transactions totaling more than USD 22 million in value," it
detailed.
Among the participants were the Industrial and Commercial Bank
of China, the country’s largest lender, its Abu Dhabi brand, and an ICBC (Asia)
subsidiary in Hong Kong, according to Financial News, the official newspaper of
the PBOC. The Bank of China’s Zhejiang Branch made payments in digital yuan
(eCNY) with HSBC and Siam Commercial Bank for two hi-tech companies in the province.
The report did not provide details of the other currencies used,
but besides China, which has been expanding the pilot project
for the eCNY, Hong Kong, the United Arab Emirates, and Thailand have been
testing Central Bank Digital Currencies (CBDCs) as well,
the South China Morning Post reported. The Hong Kong-based publication also
remarked that the experiment could undermine the role of the U.S. dollar in
foreign trade.
Russia has been desperately trying to replace the dollar with a
digital ruble for international trade. It is planning to use the digital ruble
for settlements with China, its key ally and trading partner amid western sanctions over the Ukraine war. Moscow wants to launch settlements
with the CBDC early next year.
The BIS has announced that a detailed report on the progress of
the international payment project will be released in October. The document
will cover aspects such as technical design, legal, policy, and other
regulatory considerations and present the future roadmap for the Mbridge
platform.
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