• CBDCs can connect economies more effectively by reducing the cost of cross-border settlements
• Technology developed by BIS Innovation Hub enables atomic and instant cross-border transactions
• Rollout of technologies still depends on individual governance of central banks

Daniel Eidan leads the development of solutions for central banking systems in order to facilitate cross-border payments transactions and correct inefficiencies using blockchain, distributed ledger technology and central bank digital currencies (CBDC). He is the advisor and solution architect at the Bank for International Settlements (BIS).

Two of BIS Innovation Hub’s ongoing projects are aimed at connecting economies more effectively by driving down the cost of cross-border settlements and reducing the time to clear payments.

BIS’ Project mBridge would support the use of local currencies in cross-border payments through a multi-CBDC platform with central banks driving the transactions through consensus protocol. Today’s network of banks is constrained by high cost, low speed and complex operations. The platform would enable real-time, peer-to-peer cross-border payments.

Project Mariana, still in its infancy, is an open and composable technology that explores the use of automated market makers to automate foreign exchange.

Eidan said: “From a technology perspective, we have been able to show that you can connect financial institutions across borders in a way that’s safe and secure, that can functionally settle payments instantly. The implications of that are massive.

“With that in mind, it’s not as easy as it seems. When thinking about the reality of why correspondent banking is the way it is, a lot of it is relationship-based. The challenge is enormous.”

With the pilot test completed, it would be possible to have a regional rollout of the mBridge platform within 24 months, said Eidan, but the speed of production would still depend on local governance as not all central banks have the authority to issue digital currencies.

For banks and regulators to be receptive of these technologies, BIS would have to prove that its solutions have better connectivity and liquidity features, as well as more use cases for participants.

Session Host:

Foo Boon Ping

President and
Managing Editor,
The Asian Banker

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