In order to address the difficulties in cross-border transactions, the Monetary Authority of Singapore is investigating blockchain-based payment solutions.
Cross-border payments are currently “slow, expensive, opaque, and inefficient, reliant on an antiquated network of correspondent banks,”.
According to Ravi Menon, managing director of the central bank, in his keynote address at Sibos 2022 on Monday.
Menon claims that the rise of private sector blockchain-based payment networks, speedier interconnection of payment systems. Then, a multi-central bank digital currency (CBDC) platform can all help to improve cross-border payments.
Menon noted at the SWIFT-organized event that private sector-issued tokenized bank deposits or securely-backed stablecoins can also be utilized for less expensive and quicker cross-border payments and settlements.
“Unlike private cryptocurrencies, whose prices fluctuate wildly, these digital currencies are suitable as payment instruments on distributed ledgers as they combine the advantages of tokenization with the reliability of fiat currencies,”Menon said.
According to Menon, wholesale CBDCs can be utilized on distributed ledgers to facilitate simultaneous settlements.
Menon said in August that wholesale CBDCs, or those only available to financial organizations, are preferred by the central bank.