Hong Kong and Thailand’s Central Banks on Wednesday said that they’d moved an inch closer to publishing digital currencies (CBDC), that will serve the purpose of making payments between the country with more proficiency and efficiency than they presently possess. Both Central Banks published a report, throwing light on the technical benefits of using a central bank digital currency (CBDC) which would turn cross border payments more feasible, lead to a low-cost fee, reduce the risk involved while increasing the transparency.
Colin Pou, executive director at the Hong Kong Monetary Authority (HKMA), has reportedly said that no particular timeframe has been alotted yet for a real transaction. Multiple Central banks around the globe are trying to explore the possibility of forming CBDC, digital version of traditional money. The primary area where they differ from cryptocurrencies like Bitcoin is that BTC is produced by solving perplexing math puzzles, and online communities govern them, while CBDC would be centralized.
Most projects are still premature; however, many believe that the People’s Bank of China is ahead of the pack in developing a CBDC to ensure smoother transactions in China. Pou said the HKMA had previously stated that its needless to launch a CBDC in Hong Kong, as they are proficient in it already.
He further argued that CBDC could come in handy when it comes to cross border payments, but for now, they lack the efficiency and are costly. Previous studies concluded that there are a bunch of technical challenges CBDC needs to overcome, for example, foreign exchange pricing and the effect it can have on liquidity.
Future Plans to Enhance CBDC Utility
The HKMA and Bank of Thailand would continue to strive together and try to take further strides in this initiative, which Pou suggest could be made more vast by including other banks or pair them up with other separate actions.