The Digital Dollar Project partnered with Western Union for a survey assessing central bank digital currencies (CBDCs) use in cross-border payments. The pilot project highlighted the potential benefits that came from CBDCs.
Digital Dollar Project partners with Western Union
The Digital Dollar Project seeks to promote research and public discussion on CBDCs. The project was launched by the former chair of the US Commodity Futures Trading Commission (CFTC), Chris Giancarlo, the former CFTC chief innovation officer, Daniel Gorfine, and the CEO of Pure Storage, Charles Giancarlo.
The Digital Dollar Project partnered with Western Union, BDO Unibank, and Accenture for the pilot program. This project aimed to simulate the payment infrastructure to transfer digital dollars to Philippine pesos.
The parties involved in the survey said they detected a drop in counterparty and credit risks as the offering supported instant settlement. CBDC settlements support transferring value and message in one transaction, lowering the cost of capital held within pre-funded accounts.
A digital dollar seeks to promote the accessibility and portability of digital money. This product will benefit the unbanked and the underbanked. Verified digital wallets can also lower the levels of fraud, boost the speed at which transactions are settled, lower the number of failed transactions, and improve jurisdictional requirements.
The Executive Director of the Digital Dollar Project, Jennifer Lassiter, said,
With the support of Western Union and other DDO partners, we will continue to generate the needed research and data to map feasible, real-world use cases that speak to financial institutions, policymakers, and technological partners.
The global head of digital assets at Western Union, Kevin Mole, said that the pilot program had enabled the company to identify multiple advantages for its clients and financial institutions. The offering also laid the necessary groundwork to evaluate the feasibility and viability of retail CBDCs and how they can support cross-border remittances.
Divided opinion on CBDCs
Most studies on CBDCs have focused on the preferences of central banks. However, the CFA conducted a survey to assess whether stakeholders were ready for this product.
The survey results showed limited support and understanding of CBDCs. It showed that 42% of the respondents believe central banks need to launch CBDCs, while 34% disagreed. Only 13% of the respondents admitted having a solid understanding of CBDCs.
The research also demonstrated that the adoption of CBDCs differed by region. It found that younger respondents were receptive to CBDCs.
There was also a more positive attitude from the respondents based in the Asia-Pacific region, developing economies, China, and India. Developing economies had more emphasis on boosting financial inclusion.
Despite the conflicting opinions about CBDCs, leading players in the financial industry are taking the initiative to support these assets. Mastercard launched a new CBDC Partner Program to boost collaborations with top players in the industry to boost innovation and efficiencies. The program involves leading providers of blockchain technology and payment services.