JPMorgan Report: CBDC Can Save Companies From Cross-Border Costs

A new JPMorgan report says that CBDCs can save companies billions in cross-border costs and the network considers a network of multiple central bank digital currencies in the ASEAN region so let’s read more in our latest crypto news today.

A central bank digital currency network could save companies around the world over $100 billion in a year in transaction costs when it comes to cross-border payments. The new JPMorgan report explained that the CBDCs could be really helpful in saving on cross-border costs. The report was published by consulting company firm Oliver Wyman and JPMorgan called “Unlocking $120 billion Value In Cross-border Payments” and it estimates that out of the $24 trillion in wholesale payments, the move across borders every year banks are getting more than $120 billion in total costs which excludes potential hidden costs that are trapped in liquidity and delayed settlements. Oliver Wyman partner Jason Ekberg said:

“The case for CBDCs to address pain points in cross-border payments is very compelling. The bulk of today’s wholesale cross-border payments process remains sub-optimal due to multiple intermediaries between the sending and receiving banks, often resulting in high transaction costs, long settlement times, and lack of transparency on the status of the payments.”

The Conversations around CBDCs that were driven by the march of crypto and blockchain can be about the retail issuance or type of wholesale transactions which the report describes. There were other wholesale banking initiatives over the past years led by private companies, central banks, commercial banks but nothing really like a multiple central bank digital currency network. The report used the ASEAN region as an example comprising Cambodia, Indonesia, Laos, Brunei, Singapore, Thailand, Vietnam, Myanmar, and the Philippines which operate with 10 different currencies and contribute 7% of the global cross-border trade.
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Oliver Wyman and JPMorgan suggest a new model for the ideal MCBDC which considers a process from minting and redeeming of CBDCs to FX conversion and settlement also citing many other opportunities for players in the correspondent banking who could be disrupted in a full-scale CBDC rollout. JPMorgan Global Head of Coin Systems Naveen Mallela noted:

“The development of CBDCs brings new, tangible opportunities such as subscription-based mCBDC corridor access or smart contract-enabled cash management services.”

Mallela’s Onyx division was involved in a trial connecting Singapore and France.