Central bank digital currencies (CBDC) are being trialed for cross-border payments in Australia, Malaysia, Singapore and South Africa, according to Reuters and other news outlets on Thursday (Sept. 2).
The pilot project will enable financial institutions (FIs) to use their own CBDCs with one another and determine if cross-border payment transactions are settled faster and with fewer expenses.
See also: Jamaica’s Central Bank Tests Country’s First CBDC
CBDC use is being explored worldwide, with China first out of the gate with the trial of its digital yuan across retail channels in major cities in the country. Other countries are eyeing CBDC’s potential in bettering their financial systems’ operations.
Read more: China Bank Wants Digital Yuan To Dominate
Many countries looking into how best to use CBDC — or even launch them at all — are in the early steps of figuring it out on the domestic level. A global framework that could work across the world stage is an aspect that is considered “complicated,” per Reuters.
Related: Fed’s Brainard: US Needs CBDC For International Use Cases
The new project is being trialed by the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank. The collaboration aims to create a prototype that allows for the sharing of platforms while enabling cross-border transactions using numerous CBDCs. The Bank of International Settlement’s Innovation Hub is leading the initiative.
The participating central banks will conduct a cross-border payments trial using CBDCs to assess the overall efficiency, according to the report.
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