The Banker: Asia’s Central Banks Collaborate On Digital Payments

Central banks across Asia are working together on real-time cross-border payments and central bank digital currency initiatives. The development of digital currencies by private sector players, such as cryptocurrencies like bitcoin, has accelerated digital money experimentation among central banks.

Jason Ekberg, partner in corporate and institutional banking at Oliver Wyman, says: “You have central banks, such as the People’s Bank of China (PBOC), leading the charge through their CBDC network along core corridors in south-east Asia and setting the standards. The private sector is also developing infrastructure, at a much faster place. I think the confluence of all these pilots that have been taking place is that there will be an accelerated pace of developments in 2022, as the cases are validated.”

Despite the trepidation around private cryptocurrencies, many emerging markets seem to be drawn towards CBDCs. Chia Tek Yew, vice-chairman for Singapore and head of insurance for Asia-Pacific at Oliver Wyman, says: “The emerging countries will be looking at CBDCs for different reasons, mainly as large parts of their population are underbanked. CBDCs will have that leapfrog effect for micropayments and digital wallets. And rather than doing the whole journey themselves, the countries will look at partnering with a fintech to introduce a CBDC at a retail level. The use case for these markets will be cross-border payments, such as migrant workers making remittances.”

Ultimately, end customers need to be able to use CBDCs. The Oliver Wyman report ‘Unlocking $120bn revenue in cross-border payments’ highlighted the importance of central banks involving end-users in any decision-making.

Read the full article on: The Banker