Bank Of Israel, BIS, And Hong Kong Central Bank Are Testing CBDCs Now

June 17, 2022 10:11 pm

The Bank of Israel, the BIS, and Hong Kong’s central bank are three major financial institutions that are thoroughly testing the feasibility of using central bank digital currencies now.

The banks state that one of the major goals of using CBDCs is that it will create an efficient payment system that will help increase competition in the payment market.

The testing is estimated to begin in the third quarter of this year and will hopefully produce positive results that will encourage more adoption around the world.

As more and more banks inevitably look to create their own versions of CBDCs, they may look to blockchain technology that can assist with this such as Ripple’s own CBDC platform.

Reuters.com reports:

The Bank of Israel has stepped up its research and preparation for the possible issuance of a digital shekel to create a more efficient payments system after first considering issuing a CBDC in late 2017.

“Providing an efficient payment system that will increase competition in the payment market is one of the primary motivations we’ve identified for a possible issuance of a digital shekel – an Israeli CBDC,” Bank of Israel Deputy Governor Andrew Abir said in a statement.

Last month, the bank said that while it had received public support, it had yet to make a final decision on issuing a digital shekel.

The joint project will explore the feasibility of a two-tiered architecture where there is no financial exposure of the intermediaries involved in the transaction, unlike traditional ways of central bank funds being provided to the public via commercial banks.

The use of new CBDC architecture is expected to provide multiple tangible benefits such as providing more liquidity and less transaction costs.

The banks are also receiving a lot of public support which is expected as the majority of banks that have been surveyed this year have revealed that they will be working on CBDC projects due to high customer demand.

As of right now, there are very few blockchain projects on the market right now that can provide a platform for CBDC implementation besides Ripple.

Ripple’s newly launched website specifically highlights the benefits of using its platform for this purpose and it seems that it could potentially take advantage of this growing trend.

USNews.com reports:

Israel’s central bank said on Thursday it was teaming up with the Hong Kong Monetary Authority and the Bank of International Settlements’ (BIS) Innovation Lab to test the feasibility of a central bank digital currency (CBDC) for retail.

The test will be cyber-security secured and in the proposed model, the intermediaries will have no financial exposure from customers holding or transferring CBDC, resulting in reduced risk and costs, the Bank of Israel said.

The so-called Sela project, led by the BIS Innovation Hub’s Hong Kong centre, is planned to begin in the third quarter and findings will be published by the end of the year.

The advancement of CBDC usage seems to be inevitable at this point and it is reported that the Federal Reserve is now exploring options during the midst of the current economic uncertainty.

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