New Telegraph

eNaira rated for cross-border settlements

Central Bank Digital Currencies (CBDCs) such as the eNaira can be effective in carrying out international transactions between financial institutions according to a recently concluded experiment by the Bank for International Settlements (BIS), an umbrella group for central banks. A report published by BIS yesterday said the “Project Jura’’ experiment took place over three days in November and was conducted by the central banks of France and Switzerland alongside the BIS Innovation Hub. According to the report, Jura not only explored how central banks could give non-resident commercial banks access to CBDCs, but also the capabilities of distributed ledger technology in recording these transactions. Starting on November 15, Jura tested the direct transfer of euro and Swiss franc wholesale CBDCs between French and Swiss commercial banks for three days, the report said.

The transfers were conducted on a single distributed ledger operated by a third party, according to a press statement issued by the BIS. It also tested issuing, transferring and redeeming “tokenized euro-denominated French commercial paper” between French and Swiss financial institutions. Commercial paper represents unsecured, short-term debt issued by corporations. Tokenization allows a real asset like commercial paper to be digitally represented on a blockchain or distributed ledger. According to the report, the tests were conducted using “real-value transactions within the existing legal and regulatory frameworks.”

The report emphasised the project was not part of a regulatory sandbox, which added “significant complexity” and realism to the experiment. “Our main conclusion is that wholesale CBDCs can settle such transactions both safely and efficiently,” said Benoît Coeuré, head of the BIS Innovation Hub, during a press briefing on Wednesday. Jura is the latest in a series of projects by the BIS Innovation Hub testing possible applications of CBDCs. Earlier this year, Project mCBDC Bridge found wholesale CBDCs could potentially reduce the cost of international transactions while improving settlement speed. The report suggests that based on the experiment, an intraday, wholesale CBDC could have a positive impact on financial stability and limited influence on monetary policy.

Read Previous

NBBF reconciliatory c’ttee submits report to Dare

Read Next

Ecobank Nigeria wins ‘Consumer Finance product of the year’

Leave a Reply

Your email address will not be published. Required fields are marked *