a report on the Phase I results of Project Cedar, “a
multiphase research effort to develop a technical framework for a
theoretical wholesale central bank digital currency (wCBDC).”
According to a press release, currently it takes two days for most
foreign exchange (FX) spot trades to settle, which exposes payment
senders and recipients to “settlement, counterparty, and
credit risk which, among other things, can hinder an
institution’s ability to readily convert its assets into
cash.” In Project Cedar Phase I, “the experiment
simulated a foreign exchange (FX) spot trade and introduced a
wholesale central bank digital currency prototype to test whether
using blockchain technology could improve speed, cost, and access
to cross-border wholesale payments.” In this test
environment, the experiment reportedly revealed three key
findings:
- Faster Payments: In the test environment,
transactions on the blockchain-enabled system settled in under 15
seconds on average. - Atomic Settlement: The simulated ledger
network enabled atomic settlement, meaning the two sides of the
simulated transactions were settled either simultaneously or not at
all, which reduces FX risks. - Safer and Accessible Transactions: The
distributed ledger system design enabled payments on a 24/7/365
basis and supported objectives related to interoperability across
financial institutions, including central and private sector
banks.
Separately, this week a major global bank published a press
release announcing “the world’s first digital bond that
is publicly traded and settled on both blockchain-based and
traditional exchanges.” According to the press release,
“[t]he CHF 375 million bond is digital only, and will be
issued on the blockchain-based platform of SIX Digital Exchange
(SDX) while being dual listed and traded on SDX and SIX Swiss
Exchange (SIX).”
In a final notable item, a major South African grocery chain has
reportedly announced plans to begin allowing customers to pay for
groceries with bitcoin at 39 stores in South Africa using any
bitcoin lightning-enabled app. According to reports, customers will
scan a QR code from the app and accept the conversion rate on their
smartphone at the time of the transaction.
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