The CBDC settlement project aims to develop a number of solutions bordering on the workability of CBDCs under cross-border scenarios.
The Bank for International Settlements (BIS) is advancing its Central Bank Digital Currency (CBDC) drive by including the development of a CBDC Settlement platform as a Proof-of-Concept (PoC) in collaboration with its partner Central Banks. According to a Press Release by BIS, the CBDC settlement development program is part of the bank’s annual work program which also include a couple of innovative thematic priorities such as Suptech and Regtech, next generational Financial Market Infrastructures (FMIs), Open Finance, Cyber Security, and Green Finance.The advent of digital currencies including Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) amongst others has changed the entire narrative in digital payments particularly amongst monetary authorities around the world. Additionally, the outbreak of the coronavirus pandemic also necessitated the fast-tracking of the research and development into an alternative to cash as payment means.Central Banks around the world, most of which are under the BIS umbrella are already advancing their digital currency infrastructures and the move of the BIS, in particular, is set to set the pace for the monetary authorities under its purview. The CBDC settlement program will be implemented by the Innovation Hub of the Basel based organization.“This work programme shows our commitment to exploring in the most practical ways how best to harness technological change for the benefit of central banks and create public goods to support the global financial system. We look forward to taking on the challenges of the year ahead together with our partner central banks,” said Benoît Cœuré, the Head of the Bank of International Settlement Innovation Hub (BISIH).BIS CBDC Settlement Plan in PerspectiveThe CBDC settlement project aims to develop a number of solutions bordering on the workability of CBDCs under cross-border scenarios. The initiatives will be driven by the first three BIS Innovation Hub Centres in Hong Kong, Singapore, and Switzerland which have been established in conjunction with their partner central banks: the Hong Kong Monetary Authority, the Monetary Authority of Singapore, and the Swiss National Bank.The BISIH center in Singapore will be Press Release an “international settlement platform” on which regulated banks and payment firms can settle transactions using different CBDCs. The center in Hong Kong will help develop the Green Bond tokenization project as well as the creation of a system wherein Stablecoins can be issued using different models.The Thailand center will be building on the framework of the Project Inthanon-LionRock in collaboration with the Hong Kong Monetary Authority to study the adoption of DLT to facilitate real-time cross-border fund transfers and atomic payment versus payment for foreign exchange transactions. The project also intends to enhance a cross-border corridor network prototype to support CBDCs of other central banksWhile these projects are slated for this year, a crop of CBDC developmental projects are expected to permeate the Central Bank monetary policies this year and beyond.
