In a recent publication the ECB looks for the holy grail of cross-border payments. According to the ECB the holy grail can be found at the central banks. This through the connection of different Instant Payment settlement systems or connections between CBDC’s. Earlier also the BIS already quoted that CBDC’s can outperform correspondent banking.
At first sight not strange, closer to the source gives more efficiency and lower costs. In other industries we have also seen elimination of the middleman in time. The expectation of a prominent role of the CBDS is however very premature. But in serval countries there is today already a good infrastructure for Instant Payments. However, even with instant payment there is still a long way to go. For several current players cross-border payment is a lucrative market, with earnings from transactions and FX conversion. Many banks invested a lot in the current infrastructure. They will not easily give up this market, even if their regulator is the competitor.
Anyhow changes are in the air. First wait on the next step of EU commissioner Mairead McGuninnes on her earlier tweet.
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