CBDC Network Can Save Banks $100B a Year as per JPMorgan Report

November 3, 2021

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A central bank digital currency (CBDC) network could save the JPMorgan’s of the world more than $100 billion per year in transaction costs with regards to cross-border payments. As per the report distributed Wednesday by counseling firm Oliver Wyman and megabank JPMorgan called opening $120 Billion Value in Payments.

The report gauges that of the almost $24 trillion in wholesale payments that get across borders every year, banks cause more than $120 billion in complete transaction costs.

CBDCs to Address Trouble Areas in Cross-Border Payments is Convincing

The case for CBDCs to address trouble spots in cross-border payments is exceptionally convincing, said Oliver Wyman partner Jason Ekberg said in an assertion. The heft of the present wholesale cross-border payments process stays sub-optimal because of multiple intermediaries between the sending and receiving banks, regularly resulting in high transaction costs, long settlement times, and lack of transparency on the situation with the payments.

Discussions around CBDCs, driven by the walk of cryptocurrency and blockchain innovation, can be about either retail issuance or the kind of wholesale transactions this report is centered around.

There have been a few wholesale banking drives lately driven by private firms, business banks, and central banks, the report brings up, yet not at all like a full-scale, multiple central bank digital currency (mCBDC) network.

Ideal mCBDC for Minting & Redeeming of CBDCS

JPMorgan and Oliver Wyman propose a model for the ideal mCBDC that thinks about the cycle from minting and redeeming of CBDCs to FX conversion and settlement. The report additionally refers to new opportunities for players in the correspondent banking world who may be upset by a full-scale CBDC rollout.

The improvement of CBDCs brings new, substantial opportunities, for example, subscription-based mCBDC passageway access or savvy contract-empowered money management services, said JPMorgan Global Head of Coin Systems Naveen Mallela.

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