The Bank of Thailand and Hong Kong’s central bank announced they have made progress in their plans to issue a central bank digital currency (CBDC) that will make payments between the two countries more efficient.
In recent times, different countries around the world have shown interest in exploring CBDCs, including China, and a few others. Now, the central banks of Thailand and Hong Kong released reports confirming the possibility of using CBDC to make cross border payments more efficient, not to mention cheaper, with lower risks and more transparent.
“Many central banks around the world are looking into building CBDCs, traditional money but in digital form. They would differ from cryptocurrencies like Bitcoin which are produced by solving complex math puzzles, and governed by disparate online communities instead of a centralised body,” Colin Pou, executive director of the Hong Kong Monetary Authority (HKMA), said.
Notably, Pou admitted that the HKMA initially concluded that there was no need to utilize a CBDC for payments in Hong Kong, saying they believed the nation’s existing structure was already very efficient. However, he said CBDCs could be used to streamline cross border payments, which are currently inefficient and costly.
Previous studies carried out concerning the CBDC focused on the technical challenges of using CBDCs for cross border payments. But, the latest report concentrated on practical issues like foreign exchange pricing and the impact on liquidity.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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