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Bank for International Settlements: Central Bank digital currencies will reduce the cost of international transactions

The BIS pilot project with several government digital currencies has shown a decrease in the cost and time of cross-border payments.

The BIS report was
prepared based on the results of the second phase of the project with the participation of the People’s Bank of China, the Central Bank of the United Arab Emirates, and the Hong Kong Monetary Authority.

Bank for International Settlements (BIS) – an international financial institution whose functions include facilitating cooperation between central banks and facilitating international financial settlements; it is also a center for economic and monetary experimentation.

According to the report, the launch of platforms with support for multiple national digital currencies will reduce the time for cross-border payments from 3-5 days to a few seconds. The report says the prototype has shown the ability to reduce the cost of international transactions by 50%.

“The prototype showed a significant increase in the speed of international payments from a few days to seconds. Key transaction costs have also dropped. ”

The BIS report also says that as a result of the increased transaction speed, costs between banks that do not have reliable correspondent relationships are also reduced.

Upon completion of the second phase, the project will move on to further pilot studies and a roadmap for large-scale testing.

The participation of China and the UAE in the project is probably due to the fact that in 2017 the United Arab Emirates entered the Chinese One Belt, One Road project. The project aims to build a trade infrastructure network connecting Asia, Africa and Europe along the ancient trade routes of the Silk Road.

China is already completing the final stages of digital yuan testing. The UAE’s central bank intends to issue a digital currency by 2026.

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