PBOC, cbanks join digital currency project
GUANGZHOU: Central banks from China, Thailand, United Arab Emirates and Hong Kong are exploring a digital currency cross-border payment project together. The Hong Kong Monetary Authority and the Bank of Thailand worked together to study the application of central bank digital currencies last year.
They are now expanding their work to include the People's Bank of China's (PBOC) digital currency research institute and the Central Bank of the United Arab Emirates.
Central bank digital currencies have been gaining steam with monetary authorities around the world. They broadly relate to central banks attempting to digitalize their fiat currency.
But the group of central banks led by HKMA and BOT are exploring socalled distributed ledger technology. This refers to databases that are replicated and shared among the entities involved and record transactions.
They're not necessarily owned by a single central bank but are a shared ledger of activity. DLT is seen as a way to potentially help make cross-border payments more efficient. The project will explore ways using DLT to "facilitate real-time cross-border foreign exchange payment-versus-payment transactions," said HK's central bank.
Payment-versus-payment is a settlement mechanism to ensure "that the final transfer of a payment in one currency occurs if and only if final transfer of a payment in another currency or currencies takes place," according to the Bank for International Settlements, a group of central banks.