The central banks of Hong Kong and Thailand revealed today in a published report that they are a step closer to creating a joint Central Bank Digital Currency (CBDC) to facilitate efficient payments between the two countries.
The banks confirmed that the upcoming CBDC dubbed Project Inthanon-LionRock is technically feasible and will utilize the blockchain technology to make cross border settlements more transparent and cheaper with reduced risks.
CBDC Could Streamline Global Payments
The Hong Kong Monetary Authority (HKMA) stated earlier that its current payment systems were very efficient. As such, it didn’t need to adopt a CBDC for payments within the country. However, the authority believes cross-border payments are currently inefficient and expensive, and digital currency could help solve the problem. That’s what Colin Pou, executive director at HKMA, said at a press conference.
Although the banks did not give a timeframe that they will launch and start using their upcoming CBDC for real transactions, they plan to continue working on the joint project.
While the HKMA and Bank of Thailand have conducted several studies on the technical concerns of leveraging the distributed ledger technology for cross-border payments, the report released today discussed foreign exchange pricing, the impact of liquidity, and other practical issues.
Central Banks Bullish On Cryptocurrency
Pou further revealed that other central banks could be added to Project Inthanon-LionRock or it could be linked to other separate initiatives
The list of central banks looking towards cryptocurrencies continues to grow. More banks are either actively working on a CBDC or researching the new payment system, its benefits, and risks. However, most of these projects are still in their earlier stages.
On January 21st, Cryptopotato reported that six major central banks, including Britain, Japan, and Sweden, had formed a group with the Bank of International Settlements (BIS) to research the use cases of central bank digital currencies.
Christine Lagarde, president of the European Central Bank (ECB), also said they are considering launching their CBDC without interfering with private companies with similar digital remittance networks.
“We are looking closely into the feasibility and merits of a CBDC, also because it could have major implications for the financial sector and for the transmission of monetary policy,” Lagarde said in an interview.