CBDC pilots show the capability to reduce transaction duration and solve complex existing arrangements.
Central Banks in UAE, China, Hong Kong, and Thailand under BIS (Banks International Settlements) already ventured into CBDC pilots.
Nations such as China focus on using CBDCs to replicate money circulation.
Results from recent CBDC (Central Bank Digital Currency) pilots indicated reduced transaction time and lower cost. With that, digital assets used to complete cross-border transactions, Stellar Lumens (XLM) and Ripple (XRP), might face stiff competition in the coming months.
Bank of International Settlements’ CBDC pilot Reduces Transaction Charges by 50%.
Central banks around the globe are exploring digital assets issued centrally in an attempt to utilize the advancing technology. Multiple financial institutions implemented Ripple’s real-time financial settlement functionality that uses its native asset XRP to reduce time and costs related to cross-border transactions. Ripple established many collaborations and partnerships to boost XRP’s utility.
XLM, Stellar’s native asset, competes with XRP in that space. Stellar is an open-source crypto payment blockchain that solves similarly challenged. In July, BIS (Bank of International Settlements, announced Nexus, the blueprint to introduce instant global payments. Although traditional banks found the solutions by Ripple helpful, Nexus aims to challenge payments companies by integrating ISPs (Instant Payment Systems) across different jurisdictions.
Early on Tuesday, Today, BIS posted about its successful pilot, stating that they can complete foreign exchange operations and international transfer in seconds. That is quicker than the several days it used to take. These promising results might catalyze increased centralized institutions’ participation, adopting the BIS’s payment solution.
BIS declared that the latest pilot decreased transaction time to seconds from the previous 3-5 days. Moreover, correspondent banks saw transactions completing within few seconds. Governments across the globe are exploring CBDCs usage to upgrade their financial systems.
However, China seems to concentrate on its digital token. Central banks in Thailand and Hong Kong participated in the pilot. Now, it has expanded to financial institutions in UAE and China under BIS. Recently, Fed’s Chain Jerome Powell stated that the US central banking system, consider launching a digital currency. What are your thoughts on XLM and XRP’s future performance as far as CBDCs are concerned? Comment below.