A news report has emerged that the central banks of Australia, Singapore, Malaysia and South Africa will launch a pilot program to test cross-border payments using different central bank digital currencies.

They set the goal of whether this move would allow more transactions to be accessible and profitable.

Multinational Partnership:

Central bank digital currencies seem to be an attractive financial tool for many countries around the world as many are exploring them as an effective financial tool.

While governments prefer to explore the matter individually, the central banks of four different countries will use a somewhat unusual approach.

Read:Federal Reserve Chairman: We will soon release a report on the launch of the central bank currency CBDC

According to a report by ReutersAustralia, Singapore, Malaysia and South Africa will join forces to organize a cross-border payments experiment using several central bank digital currencies.

Central banks in these countries aim to assess whether they can reduce the costs of such transactions and make them more accessible.

Aside from the four central banks, the BIS Innovation Center is also involved in leading the project.

The four institutions will also develop prototypes of a common platform to allow direct CBDC transactions without the need for intermediaries.

Mr. Fraziali Ismail, Assistant Governor of the Central Bank of Malaysia, commented:

The central bank’s multi-digital common platform…has the potential to leapfrog legacy payment arrangements and serve as the basis for a more efficient international settlement platform.

CBDC – dangerous or beneficial?

CBDC is a new, undiscovered financial instrument.

Many experts in the cryptocurrency industry are speculating whether they will bring benefits or harm to the economic system and how they can affect the cryptocurrency space.

For example, analysts at US banking giant Morgan Stanley have argued that while central bank digital currencies may impact cryptocurrency markets as they enter the arena, they are unlikely to pose a threat to decentralized technologies. These analysts saw:

Read:Concerns about compensation for victims of “Mt. Gox increases the pressure on the bitcoin price

Cryptocurrencies will still be around as they continue to serve other use cases.

Read:Cryptocurrency exchange Huobi acquires a Latin American crypto startup

For example, some cryptocurrencies can act as a store of value…as some segments of the public do not put their full confidence in fiat currencies.

On the contrary, Christian Nolting, head of information at Deutsche Bank, predicted that central bank digital currencies could turn out to be a major threat to digital currencies, and reported the following:

The widespread introduction of central bank digital currencies combined with higher regulation of cryptocurrencies could create a more challenging environment for crypto assets as some of their advantages over traditional financial assets will fade in the long run.

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