As crypto interest keeps growing among the young generation, and with many old people involvement in digital payments and crypto trading, world leaders are spurred to up their research into digital currency.
A survey of 50 central banks conducted in the first quarter of this year by the Bank for International Settlements (BIS) shows that about 28% of central banks are considering possibilities of making digital currency. Make CBDCs interoperable at the wholesale level by forming multi-CBDC arrangements, including integrating multiple CBDCs into a single payments system. According to the report, about 14% of the central banks are deeming to be active in foreign exchange conversion.
In a recent Southeast Asia conference in China, the central bankers of Singapore and Cambodia expressed their interest on the improvement of the existing international payment system, as both countries seek to launch their central banks digital currencies (CBDCs).
Cross-border payments in Singapore
Sopnendu Mohanty, the chief fintech officer at the Monetary Authority of Singapore (MAS) said in “Asia Pacific CBDC Innovation, Collaboration and the Drive to Interoperability,” at the recent Hyperledger Global Forum 2021, an enterprise blockchain event.
“With the wholesale CBDC construct, with the DLT [distributed ledger technology] construct, there is a possible opportunity to redesign the whole ledger system, especially when you are settling cross-border.”
He furthered by saying, Singapore and Thailand, which linked their national real-time retail payment systems, (PayNow in Singapore and PromptPay in Thailand) earlier this year after three years of work, reduce the cost of cross-border transfers between the two countries significantly by an average of 10 to 15% before, to 3% now. The remaining cost was mainly due to settlement fees foreign exchange, and a wholesale CBDC with DLT could “make a big difference” in further reducing the cost. A “multi-currency multi-ledger construct definitely is the way forward,” Mohanty said.
Last year, Singapore central banks, South Africa, Australia and Malaysia collaborated with BIS innovation hub in ‘Project Dunbar’ for the improvement of the cross-border settlement platform for multiple CBDCs.
Cambodia digital payment systems
The national bank of Cambodia (NBC) seeks improvement on the adoption of its Bakong retail central bank digital currency (CBDC) with the expansion of crypto and e-commerce in the country. The Cambodia NBC is now looking to push its de-dollarization policy with its CBDC.
Meanwhile, The assistant governor of National Bank of Cambodia, Serey Chea said, “there is a lot of room to grow in the internet economy in Southeast Asia. Cambodia is a small country of 16 million people, where we have about 20 million mobile phone subscriptions,” during the panel discussion on Cambodia’s Project Bakong. He further explained how Covid-19 boosted the digitalization of economies, as many people were forced to shop online due to lockdown.
Since the evolution of digital currency, Southeast-Asian countries have been at the forefront of researching and testing the CBDCs, and countries like Philippines, Malaysia, Thailand and Cambodia have proposed CBDCs due to the increase in e-commerce and digital payments amongst ASEAN countries.
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