The BIS published the findings on a multi-CBDC project between central banks in Hong Kong, Thailand, China, and the UAE, showing the benefits of central bank-backed digital currency.
The head of the Bank for International Settlements has asked central banks to step up their efforts with CBDCs as they face a threat from stablecoins and DeFi.
The reserve banks in each country have teamed up to trial a new platform for enabling cross-border transfers denominated in a central bank digital currency.
While the trial demonstrated the feasibility of a wholesale CBDC, the bank claimed that distributed ledger technology has not yet proven its ability to handle the European country’s payments system.
Tokenization of CBDCs makes settlements far quicker, easier and cost-effective, with a number of central banks around the world already exploring this option, according to the chief of BIS Innovation Hub.
The BIS report analyzed the so-called “trade-offs” that would be required in designing central bank digital currencies.
A Bank for International Settlements paper seeks to demonstrate the need for “institutional backing” to improve the efficiency of cryptocurrencies.