Hong Kong and Thailand to Pilot CBDC Project for Cross-border Payments
Cross-border CBDC payments could soon be a reality. This follows the announcement by The central banks of Hong Kong and Thailand that they were on the cusp of jointly implementing a similar payments system.
In an official communique released on 22 January, the two banks disclosed the results of Project Inthanon-Lionrock, a CBDC research project the two are cooperating in. The banks issued a joint press release and availed a 90-page report detailing the pros and cons of CBDC on various aspects of finance.
According to the communication, the central banks kicked off the project in May last year. The teams wrapped up the project last month.
R3’s Expertise Crucial in the CBDC Project’s Success
The project tapped ten banks from the two countries for its trials of a blockchain-based Proof-of-Concept (PoC) prototype. R3 provided the technical support; the report went on to state.
Central to the project was the creation of a cross-border corridor between the currencies of the two countries. This corridor would allow the transfer of funds and the completion of P2P foreign exchange transactions. The corridor is expected to expedite settlements and lower transaction costs.
R3’s Corda blockchain is the project’s backbone. It employs smart contracts to conclude atomic Payment-versus-Payment(PvP) foreign exchange settlements.
The teams expressed optimism that the successful trial of the PoC prototype would significantly eliminate intermediaries and settlement layers compared with the traditional financial systems. It also prevents double-spending.
The Beginning of Other Collaborations
Central Bank of Thailand’s Mathee Supapongse conveyed his confidence in the adoption of new technologies such as blockchain. He held it that the two banks’ cooperation was just a start in tackling present and emerging challenges impeding efficient cross-border funds transfer.
The banks reiterated their commitment to undertaking joint research in areas of mutual interest.
Elsewhere, other central banks are also working on similar projects. Recently Thailand’s oldest bank, SCB, collaborated with Ripple to create a Blockchain-based mobile app capable of offering immediate, low-cost cross-border payments.