mCBDC network could save corporates USD 100 bln yearly

Wednesday 3 November 2021 13:42 CET | News

A full-scale, multiple central bank digital currency (mCBDC) can potentially save global corporates up to USD 100 billion in transaction costs annually, research shows.

The network needs to facilitate round-the-clock, cross-border payments in real time, according to a joint research report published by Oliver Wyman and JP Morgan.

The report outlines the implementation considerations for both central banks and commercial banks in developing, operating, and governing mCBDCs. It recognises the potential of a central bank digital currency network as an effective blueprint to introduce greater efficiencies that exist in wholesale payments occurring across borders.

The report estimates that of the nearly USD 24 trillion in wholesale payments that moved across borders each year, global corporates incur more than USD 120 billion in total transaction costs; this excludes potential hidden costs in trapped liquidity and delayed settlements.

The research outlines four critical elements required for mCBDC implementation, which include:

  • the building blocks, from minting and redeeming of CBDCs to FX conversion and settlement;

  • the roles and responsibilities of central banks, commercial banks, and service providers;

  • the key design considerations covering data, technology, privacy, and credit extension;

  • and the governance framework.

While implementation considerations are applicable globally, the report puts focus on ASEAN, a region that operates across a diverse set of 10 currencies and contributes 7% of global cross-border trade.

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Keywords: research, JP Morgan, CBDC, central bank, digital currency
Categories: DeFi & Crypto & Web3
Countries: World
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DeFi & Crypto & Web3

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