|A man wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. (File photo by=REUTERS/Jason Lee)|
[Asia News Communication = Reporter Reakkana] China's central bank will join a project looking at using central bank digital currencies (CBDC) for cross-border payments, the Bank of International Settlements said on Tuesday.
Reuters reported that CBDCs are like banknotes or coins, and give holders a direct claim on the central bank, potentially leapfrogging commercial banks. The People's Bank of China (PBOC) has its own domestic CBDC project, the e-CNY, one of the most advanced initiatives of its kind in the world, in which real-life trials took place in several major cities. Observers globally are watching the e-CNY closely, interested in both lessons they can learn and whether and how the PBOC tries to use it to internationalize the yuan, a long-standing ambition of Chinese authorities.
Tuesday's statement said the PBOC's Digital Currency Institute will join the multiple CBDC Bridge initiative currently run by the BIS and the Hong Kong and Thai central banks. The project aims to develop a process for real-time cross-border foreign-exchange payments on distributed ledger technology, which underpins cryptocurrencies such as bitcoin. Meanwhile, the Hong Kong Monetary Authority (HKMA) and Bank of Thailand last year developed a prototype allowing banks in the two countries to use a CBDC to transfer funds and make payments between themselves.