A UK consortium of private sector firms will begin a year-long pilot scheme to test cross-border payments and provide recommendations to the Bank of England.
The Digital FMI Consortium will start the pilot scheme in October this year and run it till October 2023 at a minimum, claims CoinDesk.
The consortium will provide recommendations to the Bank of England using dSterling, its own sterling-backed stablecoin.
The pilot project will be known as Project New Era, and the Digital FMI Consortium – which has 15-20 members – will provide whitepapers and recommendations to the Bank of England and other regulators.
CoinDesk noted that the UK is looking to become a ‘crypto hub’, according to former Chancellor Rishi Sunak. Last November, the Bank of England said it was assessing a case for a central bank digital currency.
Boston Consulting Group managing director and partner Kunal Jhanji said, “With the advent of DLT [distributed ledger technology] and blockchain technology, digital assets are ushering in a new era for money, with potentially transformative benefits for consumers, businesses, financial institutions and states.”
A new paper by the European Central Bank (ECB) has said CBDCs could be the answer to a ‘thousand-year search for the holy grail of cross-border payments’.
According to Finextra, the paper highlighted that the concept covers a system that is ‘cheap, universal and settled in a secure settlement medium’, with the search for such a solution described as ‘old as international commerce and the implied need to pay’. However, the paper stated it believed this holy grail could be found within the next 10 years.
The ECB is currently exploring several options for achieving this, including correspondent banking, emerging FinTech services, stablecoins, CBDCs, Bitcoin and the interlinking of domestic payment systems.
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