Banks Race to Accelerate Adoption of Fiat-Backed Crypto

Asia Blockchain Review
January 18, 2020

Central and regional banks are seeking ways to adopt fiat-backed cryptocurrency that will help facilitate cross-border transactions and payment systems.

Higher Interest for Central Bank Digital Currencies

As reported by Computer World, a recent report from accounting services provider KPMG revealed central and regional banks across different parts of the world are carrying out projects to develop blockchain-enabled central bank digital currencies (CBDC) that could potentially boost international trade.

Arun Ghosh, U.S. Blockchain Leader at KPMG, wrote in a blog post that the firm is looking to help its clients seek ways to adopt blockchain technology and cryptocurrency.

“In 2020, we at KPMG expect to assist regional and central banks in the development of well-defined technology frameworks that can anchor private-sector initiatives,” Ghosh wrote.

Dong He, deputy director of the IMF’s Monetary and Capital Markets Department, also revealed that fiat-backed cryptocurrencies has many advantages, such as the fact that crypto asset transactions can be cleared and settled without relying on an intermediary.

“The advantages are especially apparent in cross-border payments, which are costly, cumbersome, and opaque,” he said. “New services using distributed ledger technology and crypto assets have slashed the time it takes for cross-border payments to reach their destination from days to seconds by bypassing correspondent banking networks.”

Bank of England Researches Advantages of Crypto

Meanwhile, the Bank of England has published papers detailing the monetary policy and financial system implications of issuing CDBCs.

“If a central bank issued a digital currency, then everyone (including businesses, households and financial institutions other than banks) could store value and make payments in electronic central bank money,” the Bank stated. 

“While this may seem like a small change, it could have wide-ranging implications for monetary policy and financial stability.”


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