Australia, Malaysia, Singapore, South Africa test cross-border crypto-payments

The central banks of Australia, Singapore, Malaysia, and South Africa have signed up to test interoperability of central bank digital currencies for cross-border payments. None of the four nations’ central banks has a working digital currency (CBDC), and won't have for months – if not years. But all four have commenced work …

[Anonymous Coward]

Or Yuan

The cross border costs is mainly the exchange risk surely, plus the compliance risk (I call it the OECD shit, they dumped liability onto their banks, so the banks in turn, choked off a lot of their transaction economy rather than assume the risk).

Given the actual transmission and verification can be done by computers, the transaction itself isn't the delay, and the exchange risk is simply because the banks chose to add that delay to their systems. The exchange rate may vary between the time of the transaction and the actual processing, of the transfer. That risk is priced into the exchange spread, plus they get to add their profits ontop hidden amount the large exchange spread.

Crypto crapto doesn't fix any real problem here. If anything the number of scams and thefts show it's got more attack points than a centralized system. A centralized system needs a central currency. What currency would be the core one in that case? SGD? Renmibis? Rand()? Ponzi Coins?

Imagine the world largest manufacturing economy, China, offering bank accounts in CNY. Anyone can open an account, you transfer money in, it stays in CNY, you buy your Chinese goods direct from China, paying from your own CNY account, access it using Unionpay, you invest in the Chinese stock markets, in CNY. Gone is your exchange risk. No OECD shit too, that's a European/US thing, Asia hasn't mawled their banking system the way the Euro was mawled.

That could once have been the Euro, that use to be the dollar.

[sreynolds]

They're a bunch of muppets

What are they trying to achieve? A virtual currency that fluctuates with their currencies? A new virtual USD? A new gold standard? What is the point? Or are they trying to remove the lucrative profits made by banks skimming the cream off forex transactions?

[scrubber]

"What are they trying to achieve?"

That, my friend, is the single most important question.

They are trying to achieve complete visibility and, ultimately, control of all transactions domestically.

Imagine the Australian government's ability to enforce lockdown if it can also stop all economic transactions in a given area for a given period. Imagine the amount of control Singapore will have over its citizens of it can deny certain people the ability to purchase certain things. Imagine the power of the Malaysian state of it can give you a social rating based on what you bought and where you bought it.

This is not about financial efficiency, it not about the "criminality" of public cryptos. It is about the anonymity of cash and the ability of the government to view and control every aspect of our lives.

[Pascal Monett]

"all the qualities of other instruments like banknotes but lends itself to electronic exchange"

I'm sorry, fiat currencies do not lend themselves to digital exchange ? Since when ?

The only time I have to use banknotes is when I'm going for pizza takeout at my friendly local pizzaiolo in his mobile kitchen.

The rest of the time, I'm using a no-contact VISA.

Apparently, you can also use your phone for paying stuff.

I can also send money to anyone with an IBAN number. I do that all the time when I have to pay an invoice for work done in the house, or an important delivery. Easy as pie.

The only thing I can't do digitally is give someone ten bucks (euros, whatever). To do that, I have to use physical currency.

If that is the problem they want to solve, I think it would be a lot more simple to have an app from the bank that you can charge, and via Blutooth you could sync between two phones for a given amount. End of problem. No need to go fabricate some more funny money for that.

Stop with the funny money already.

[Martin Gregorie]

Asleep at the switch?

I wonder why SWIFT doesn't seem to be looking into this stuff, given that its often the only way to make international bank transfers outside Europe.

But, judging by the type and amount of information needed to complete the last such payment I needed to make and the time it took to complete, the basics of the SWIFT operation haven't changed in the last 25 years or so: in other words its still sending messages about money rather than the message being the money, as is the case for EuroPay or UK's FastPay systems.

Maybe they're developing a new faster system in stealth mode even as I write this: who knows.

[fuzzie]

Experiments expanding internationally

The SARB (South African Reserve Bank) has a Fintech unit which has been running various experiments and built proofs-of-concept over the past few years. Crypto currencies are just a small part of it. One of the experiments investigated inter-bank settlements, i.e between various commercial banks and the reserve bank itself. Subsequent projects looked at bond settlements. They were looking at scalability and interoperability across diverse on-prem and different cloud-based platforms.

* https://www.resbank.co.za/en/home/quick-links/fintech

* https://www.ledgerinsights.com/south-africa-launches-second-cbdc-trial-central-bank-digital-currency/

* https://www.itweb.co.za/content/KPNG8v8dZW2v4mwD

* https://www.itweb.co.za/content/Gb3Bw7W8n98M2k6V

My understanding of those new announcement is expanding those projects across into an international sphere, i.e. across legal and regulatory frameworks and between different currency domains.

[Anonymous Coward]

The need for the service

Countries, central banks, regular banks, and international corporations move mega money all the time. This is an attempt to facilitate this.

Quicker - Time is money. Some transactions should be, ideally, measured in sub-seconds, much as a gamer strives for zero lag. In the world of today, this is not possible.

Easier - Simplicity is money. The goal of these transactions is to move money money not only from one entity to another but also to have it arrive in the receiver's currency. In the world of today this introduces complexity which takes time (see above) and money (see below).

Stronger - Security is money - Transactions should be secure. In the world of today hacks are rare but they do occur, like the 2016 Bangladeshi Bank heist via the SWIFT network.

Cheaper - Money is money. The goal of a transaction is, ultimately, to transfer data at data transfer rates. In the world of today, many transactions end up going through third parties (like clearinghouses or Forex) each of which introduces its own fees which are far in excess of the actual cost.

I don't know what possible solutions they will come up with but I can certainly appreciate their attempt at fixing the mechanisms that exist today.

[Anonymous Coward]

Re: The need for the service

None of that is true, those benefits don't come from that system.

The really big problem here is, with a blockchain the WHOLE GROUP verifying the block chain sees ALL the transaction on the blockchain, even the transactions they're not party to and shouldn't have access to.

So Malaysia - Singapore transactions would normally be a matter between BIS, Malaysia's central bank and Singapores central bank.

However if they blockchain it, then the whole group holds the blockchain, and suddencly Australia also gets all that Malaysia-Singapore data too. Which in turns means its intel partners get that, and the secondary intel partners and so on. None of which is in Malaysia's interests.

Obviously a countries banking data is a national security matter, and BIS is the trusted middleman. Such information would be highly desireable for Malaysian and Singapore competitors (Especially if it later expanded to Malaysia's biggest trading partner, the current FUD target China).

Now you have a massive info leak, done for claimed benefits that simply don't exist. Which is foolish at best.

In that group, I view Malaysia as the victim and Australia as a perp.

[added] Look at this paragraph here. The logic is all over the place.

"But all four have commenced work to understand how they might construct and operate a CDBC. They're doing so because of an increasing buzz that central banks should issue digital currency that has all the qualities of other instruments like banknotes but lends itself to electronic exchange. Central banks have also sniffed the wind and seen that private digital currencies are gaining popularity but are often used in ways that make economic planning harder, evade regulation and taxation, or facilitate criminal activity. CDBCs are seen as a way to bring digi-bucks safely into the mainstream."

Buzz as a reason? "the qualities of banknotes" as if money travels around as paper. Blockchain as both "facilitating crime" and yet somehow super auditable and traceable for banking! It's fooking garbage.