As a seasoned crypto investor with a keen eye for global financial trends, I find the recent developments surrounding central bank digital currencies (CBDCs) quite intriguing. Having navigated through the crypto market’s rollercoaster ride, I can see that central banks are not as enamored with CBDCs as some might have anticipated.
Although there’s been a continuous rise in research related to central bank digital currencies (CBDC), central bankers are exhibiting a noticeable decline in interest, according to the findings from the Annual Future of Payments survey conducted by the OMFIF think tank.
CBDCs only look good to some central banks
Among central banks, linking real-time payment systems like the US FedNow, is currently the preferred method (by about 47%) for enhancing cross-border transactions. This figure is slightly higher than last year’s results. Meanwhile, stablecoins continue to receive no votes, as was the case last year.
In 2024, Central Bank Digital Currencies (CBDCs) dropped from being used by 31% of institutions to just 13%. This could indicate an increased focus or interest in CBDCs among some central banks.
In October, when the Bank for International Settlements (BIS) decided to withdraw from Project mBridge, many saw this action as a response to the potential risk it poses to international sanctions, given that China and other nations not traditionally allied with the Western world hold significant influence within the project.
According to the statement, the Bank for International Settlements insisted that their stance on Project mBridge wasn’t influenced by politics. The report predicts that the US dollar will remain the currency of choice for settlements. Interestingly, only 11% of central banks mentioned they are decreasing their usage of the dollar.
“For now, many players searching for a safe haven in the face of geopolitical tensions will increase holdings of the dollar, reinforcing the dominance of incumbent payments systems.”
Tokenization and TradFi are looking better
For quite some time now, the global banking system where major international banks facilitate cross-border transactions for smaller local banks has faced a downward trend. As Know Your Customer (KYC) and Anti-Money Laundering regulations become increasingly intricate, the associated costs have been on the rise.
If the new ISO 20022 messaging standard isn’t put into action as planned, its deterioration will happen more quickly. The study suggests that there’s a strong possibility of a considerable delay in implementing this new standard.
It seems that the enthusiasm among central banks regarding tokenization is significant, as it offers a potential solution for simplifying compliance procedures. Approximately 40% of central banks in mature economies view tokenization as promising and plan to initiate projects within the next 3 to 5 years.
“Project Agora, led by the Bank for International Settlements (BIS) and involving central banks from France, Japan, South Korea, Mexico, Switzerland, the United Kingdom, and the U.S Federal Reserve Banks, is a pioneering initiative exploring tokenized transfers. This project relies significantly on the implementation of wholesale Central Bank Digital Currencies (CBDCs).
Despite the strong preference for traditional instant payment systems in cross-border transactions, it appears that blockchain technology may not be the primary solution for these payments. The Bank for International Settlements (BIS) is ready for this scenario as well. In fact, their Project Nexus, which adheres to the ISO 20022 standard, is working on creating a shared platform for instant payment systems.
Read More
- GBP EUR PREDICTION
- POL PREDICTION. POL cryptocurrency
- SEI PREDICTION. SEI cryptocurrency
- TRB PREDICTION. TRB cryptocurrency
- HBAR PREDICTION. HBAR cryptocurrency
- CNY RUB PREDICTION
- CTXC PREDICTION. CTXC cryptocurrency
- TNSR PREDICTION. TNSR cryptocurrency
- RLC PREDICTION. RLC cryptocurrency
- OKB PREDICTION. OKB cryptocurrency
2024-11-29 22:51