According to the CNBC report, central banks from China, Thailand, United Arab Emirates, and Hong Kong are exploring a CBDC 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 (CBDC) last year. The financial authorities are now expanding their work to include the People’s Bank of China’s digital currency research institute and the Central Bank of the United Arab Emirates.
The project will explore ways using DLT to “facilitate the cross-border transaction.
The group of central banks led by HKMA and BOT will explore so-called distributed ledger technology (DLT). 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 help make cross-border payments more efficient potentially. The project will explore ways using DLT to “facilitate real-time cross-border foreign exchange payment-versus-payment transactions,” Hong Kong’s central bank revealed.
China leads the way in issuing a CBDC on a large scale.
This year Beijing, Shanghai, and Guangdong, China’s wealthiest provinces, all made new commitments to test the digital yuan. The digital yuan, Digital Currency Electronic Payment (DCEP), is part of China’s plan to move towards a cashless society. Unlike bitcoin and other cryptocurrencies, the DCEP is issued and backed by the country’s central bank and is designed as a digital version of the yuan. A number of other pilot projects for the digital yuan have been held in Xiongan, Chengdu, and venues for the 2022 Winter Olympics in Beijing.