Mastercard and India highlight CBDCs in a retrospective, highlighting the potential of these technologies.
The “rbi” is the Reserve Bank of India. This week, Mastercard and India Highlight CBDCs in Retrospective – CBDCs Weekly.
The Point of View of Mastercard
With the end of the year approaching, Mastercard has taken the opportunity to reflect on digital assets in 2021 and what we might anticipate in the future. The emergence of Stablecoins, and how these assets sparked a CBDC development race, is one especially significant observation.
The stablecoin market is expected to reach $150 billion in 2021, according to Mastercard, and “this market activity has drawn the attention of authorities…” Many of them are concerned that certain stablecoins lack proper consumer safeguards and may jeopardize the whole economy.”
As a result of this possible threat, central banks all over the globe have started to use the same technology that supports stablecoins (blockchain) to combat their ascent to popularity. “CBDCs may also bring more unbanked individuals into the digital economy while making it simpler to dispense benefits,” Mastercard explains what a CBDC might imply for governments. These tokens may also provide a means for central banks to keep control over the integrity and stability of their economies.”
According to Mastercard’s assessment, the following nations are leading the way in CBDC development.
Banking in India: Trends and Progress
The Reserve Bank of India (RBI), like Mastercard, has published a report on banking in India until 2021. The RBI discusses CBDCs and the significance that these digital assets will play in the future.
While there are several advantages to having a CBDC, the RBI emphasizes one in particular: cross-border payments. “Cross-border correspondent banking has wilted during the last decade,” according to the RBI. The disappearance of correspondent banks might have a negative impact on financial inclusion, increase the cost of cross-border transfers, or push them underground… The CBDC has the potential to improve cross-border payment efficiency and may offer an alternative to correspondent banks in the future.”
This approach is consistent with previous comments from bank spokespeople, who have mentioned the possibility for CBDCs to control the ‘proliferation’ of private digital assets. While little is known about the RBI’s CBDC’s current level of development, it is apparent that the bank is keeping a close eye on several other countries working on similar projects – especially, a collaborative effort by the BIS, Hong Kong, China, and the UAE known as’mBridge.’
Delay in Thailand
We discussed the events around a CBDC issued by the Bank of Thailand a few months ago (BoT). This endeavor has now been postponed, according to Kasidit Tansanguan, Deputy Central Bank Director. The banks pilot program’s new debut date has been pushed out to the end of 2022, rather than the spring.
Apart from providing an update timeline, Tansanguan emphasized the need of such a product, saying, “Thailand may still take a steady step in the retail CBDC to guarantee efficiency and prudence since it does not have an issue with money transfers or payments like some other nations.”
Despite this requirement, the BoT has said that any CBDC issued would not be designed to replace the current financial system. Rather, the proposed CBDC is only a practice run that would enable it to collaborate smoothly with other countries on a similar route.
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