WorldMoney & Business

Central Bank Digital Currencies Will Lower Remittance Costs: Moody’s

Central bank digital currencies (CBDCs) will likely lower costs for individuals sending remittances and reduce settlement and counterparty risks for banks in cross-border transactions, a report by Moody’s Investors Service has said.

CBDCs are the digital form of a country’s money issued by its central bank. They are similar to cryptocurrencies, except that their value is fixed by the monetary authority and equal to the country’s fiat currency.

CBDCs are expected to provide some middle ground for the highly volatile cryptocurrency market. They reduce the risks associated with using cryptocurrency and provide a stable means of exchanging digital assets.

A widely accessible, reliable retail CBDC would support economic growth by speeding payment transaction times, reducing transaction costs and fostering financial inclusion.

However, Moody’s said that if the CBDC payment system is widely adopted, it would reduce banks’ profits from payments, correspondent services and likely also from foreign-exchange transactions.

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The National
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