Road to Success

The International Monetary Fund has identified central bank digital currencies (CBDCs) as more efficient alternatives to physical cash that promise to lower transaction costs, promote financial inclusion, limit illicit activity and improve the functioning of monetary policy. At the same time, public-private partnerships are essential to fully realizing that potential.

Commercial banks possess a wealth of knowledge and experience when it comes to customer onboarding, fraud detection and data protection. This makes them good partners for central banks seeking to implement or pilot CBDCs, particularly at the retail level. At the very least, central banks will want to collaborate with the private sector.

This edition of the “Blockchain Payments Tracker®” examines why public-private partnerships play a pivotal role as governments explore blockchain technology uses.

Around the Blockchain Payments Space

In response to President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets, the U.S. Department of the Treasury and other federal entities recently issued a series of reports looking at the benefits of payments innovation.

The reports determined that the development of a U.S. CBDC would be in the national interest and that instant payments usage should be encouraged to support a more competitive, efficient and inclusive payments environment. The reports also emphasized regulatory protections that permit responsible innovation and improvement of cross-border payments. The devaluation of African fiat currencies has already driven interest in cryptocurrencies as alternative stores of value, but public-private partnerships are helping to speed up adoption as blockchain growth on the continent exceeds many predictions. Even with a patchwork of local regulations, interest in cryptocurrency is higher than anywhere else in the world, with Kenya, Nigeria, South Africa and Tanzania all ranking in the top 20 on the Global Crypto Adoption Index.

For more on these and other stories, visit the Tracker’s News and Trends section.

How Interoperability is Fueling Blockchain Adoption

Blockchain has the potential to revolutionize the payments industry by enabling faster payments, better security and a lower-cost alternative for reducing barriers to financial inclusion. Adopting new technology from scratch, however, is much more challenging than building it into the traditional and existing payment ecosystem.

To get the Insider POV, we spoke with Anish Jain, CEO of WadzPay, to learn how the marriage of blockchain innovation with established systems is giving rise to the next revolution in the payments industry.

Bringing Wholesale Improvements to Cross-Border Payments

As central banks roll out CBDCs for wholesale and retail use cases, public-private partnerships are expected to play a pivotal role. This is especially true for cross-border payments. With the ability to complete transactions in real time and at any time, a full-scale multi-CBDC network that enables wholesale payments would greatly improve the efficiency of global cross-border payment systems. Additionally, such a network could annually save corporations more than $100 billion in transaction fees while adding transparency and reducing transaction times.

To learn more about how wholesale CBDCs promise faster cross-border payments and innovation, read the Tracker’s PYMNTS Intelligence.

About the Tracker

This edition of the “Blockchain Payments Tracker®,” a collaboration with Algorand, examines why public-private partnerships are playing a pivotal role as governments explore blockchain technology uses.