Connect with us


CBDC oversight highlights role of compliance as technology scales

CBDC oversight highlights role of compliance as technology scales


The technology for central bank digital currencies (CBDCs) already exists.

And as dozens of countries around the world have demonstrated in less time than it took you to read this sentence, national bank-issued digital money can effectively settle payments in near real-time using distributed ledger technology (DLT). This fact alone could change a lot about commerce if it were allowed.

On Thursday (May 23), news broke that the U.S. House of Representatives had passed a bill to prohibit the issuance of U.S. CBDCs without the express authorization of Congress, potentially making the U.S. the first country in the world to ban CBDCs. Meanwhile, the previous week (May 17), the Hong Kong Monetary Authority (HKMA) announced it would partner with the People's Bank of China (PBoC) to expand the scope of its own CBDC pilot. In light of these new policies, getting a full grasp of what CBDCs mean for the future of finance has become a top priority for banks and businesses looking to innovate in money transfers.

Both the HKMA effort and the CBDC Surveillance Prevention National Bill (HR 5403) centre around a retail CBDC, which is essentially a digital version of a country's fiat currency designed for use by ordinary people for everyday transactions.

But retail CBDCs are not the only tokenized fiat currency that may exist in the future: wholesale CBDCs are also being piloted in countries across the four hemispheres.

A wholesale CBDC is a digital currency designed to be used by financial institutions to settle interbank transactions and streamline the broader financial infrastructure by providing a more efficient, transparent and secure payment process between banks and other financial institutions.

Wholesale CBDC is entirely different from retail CBDC. Its introduction will enable innovative financial products and services, such as atomic swaps and smart contracts, which can automate complex financial transactions and reduce reliance on intermediaries.

Still, whether CBDCs are designed for retail or wholesale use, ensuring these digital currencies are secure, transparent, and operate within a regulated environment through real-time compliance is a crucial next step.

Read more: BIS: CBDC needs risk management framework to combat operational risks

The Importance of Compliance in the Expansion of Financial Innovation

In the context of wholesale CBDC, compliance is essential to maintain the stability and security of financial markets. Compliance ensures that all transactions take place within existing regulatory frameworks, preventing market abuse and financial crime. Furthermore, real-time compliance improves risk management and enables regulators to respond quickly to emerging threats.

As experiments with digital currencies progress, the interplay between technology, regulation and innovation will shape the evolution of CBDCs and their impact on the global financial landscape.

It's time to make compliance a growth driver, Sovos CEO Kevin Akeroyd told PYMNTS.

Integrating wholesale CBDC capabilities into the existing financial system comes with its own challenges, including interoperability with current infrastructure, scalability concerns, and the need for a comprehensive regulatory framework to oversee DLT-based transactions.

To scale, existing regulated, central bank-guaranteed currencies need to be brought onto the blockchain, which hasn't happened yet, Mastercard Chief Digital Officer Jorn Lambert told PYMNTS last July, a comment that still rings true nearly a year later.

Read more: Major central banks approach key milestone in CBDC research

Still, the introduction of a wholesale CBDC has the potential to shorten interbank settlement times, lower transaction costs, and increase efficiencies in areas such as cross-border payments.

Using a shared ledger, financial institutions can achieve real-time gross settlement and minimize counterparty risk and operational inefficiencies associated with traditional banking systems. At the same time, leveraging DLT can improve transaction tracking and auditing, increasing transparency and integrity across the financial system.

If this all sounds great, that’s because innovations often are, at least until they run up against the realities of market implementation and scalability. Overcoming these obstacles will require collaboration between central banks, governments, financial institutions, technology providers and ordinary people.

“I think this is at least five years away from where we are today,” Catherine Gu, head of CBDC and protocols at Visa, told PYMNTS.

But it’s not technical feasibility that’s holding back CBDCs – rather, it’s behavioral conditions, interoperability needs, and other concerns, all of which are areas that can be mitigated by an effective compliance program.

Read more: CBDC, Central Bank Digital Currency, Compliance, Congress, Digital Assets, Digital Currency, Digital Transformation, Featured News, Financial Innovation, Financial Technology, Hong Kong, Innovation, Law, News, Payment Methods, Payments Innovation, Politics, PYMNTS News, Regulation, Retail CBDC, TechREG, Wholesale CBDC




The mention sources can contact us to remove/changing this article

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos


to request, modification Contact us at Here or [email protected]