Monetary authorities in four jurisdictions in Asia have experimented with international settlements using state-issued digital currencies. Cross-border payments and foreign exchange transactions of over $22 million were made under the pilot project in partnership with the Bank for International Settlements.
Asian central banks are experimenting with real-value international settlements using digital currencies
Monetary policy regulators in China, Hong Kong, Thailand and the United Arab Emirates have experimented with cross-border payments using their issued digital currencies. The Hong Kong Innovation Hub Center of the Bank for International Settlements (BIS) announced the successful completion of the pilot.
The inspections, which took place between August 15 and September 23, focused on genuine value transactions. They were processed by a distributed blockchain called Embridge, a payment project launched in 2019 by the Hong Kong Monetary Authority, the Bank of Thailand and the BIS Innovation Center. The People’s Bank of China and the Central Bank from the United Arab Emirates joined the project in 2021. .
During the trial, 20 commercial banks used the platform to settle various types of payments to corporate clients, mostly for cross-border trade, BIS explained in a LinkedIn post. “Over $12 million has been issued on the platform, facilitating more than 160 cross-border payments and foreign exchange transactions, with a total value of over $22 million“, she elaborated.
According to Financial News, the PBOC’s official newspaper, the participants included the country’s largest lender Industrial and Commercial Bank of China and its Abu Dhabi brand and Hong Kong subsidiary ICBC (Asia). Bank of China’s Zhejiang branch has made digital yuan (eCNY) payments with HSBC and Siam Commercial Bank for two high-tech companies in the province.
The report did not provide further details on the other currencies used, but in addition to China, where the pilot project for eCNY, Hong Kong, the United Arab Emirates and Thailand has been expanded, the central bank has tested digital currencies (CBDC) likewise, noted the South China Morning Post. The Hong Kong-based publication also noted that the experiment could undermine the role of the US dollar in foreign trade if banks could settle directly without the greenback.
Other countries, like Russia, aiming to do the same with their own digital currency projects. According to a recent report, the Russian Federation intends to use The digital ruble For reconciliation with China, its main ally and trading partner, in the wake of geopolitical and economic tensions with the West over Ukraine. Wants to start settlements with Moscow CBDC Early next year.
A detailed report on the progress of the International Payments Scheme will be published in October, BIS said in the announcement. This document covers aspects such as technical design, legal, policy and other regulatory considerations, and outlines the future roadmap for the Mbridge platform.
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