The Bank for International Settlements is teaming up with the central banks of Australia, Malaysia, Singapore and South Africa to test the use of central bank digital currencies (CBDCs) to settle cross-border payments.
As part of a new initiative named Project Dunbar, the global body for central banks will develop a prototype of shared platforms for cross-border transactions using multiple CBDCs.
“These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions,” the BIS said.
CBDCs are a form of digital money, denominated in the national unit of account, which is a direct liability of the central bank. These can be designed for use either among financial intermediaries or by the wider economy.
"The multi-CBDC shared platform explored under Project Dunbar has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform,” Fraziali Ismail, assistant governor of Bank Negara Malaysia, said.
“We hope the project will spur greater public-private collaboration to enable fast and frictionless cross-border payments, combining both the benefits of distributed ledger technology and the efficiency of a common platform.”
The BIS has long voiced its support for CBDCs, saying they contribute to an open, safe and competitive monetary system that supports innovation and serves the public interest.
"CBDCs could form the backbone of a highly efficient new digital payment system by enabling broad access and providing strong data governance and privacy standards based on digital ID," the BIS said in June. "To realise the full potential of CBDCs for more efficient cross-border payments, international collaboration will be paramount."
Cryptocurrencies, on the other hand, are speculative assets that in many instances enable criminal activity and "work against the public good", it added.
The BIS is planning to publish the results of the “Project Dunbar” in early 2022, which will provide more information on the development of the platform for global and regional settlements.
In April, the Bank of Japan said it would begin a series of experiments for a digital yen and the UK Treasury and Bank of England said they would establish a task force to develop a "Britcoin".
G7 finance ministers and central bank governors have also pledged to work together on CBDCs to develop an understanding "on their wider public policy implications".
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Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.
How to keep control of your emotions
If your investment decisions are being dictated by emotions such as fear, greed, hope, frustration and boredom, it is time for a rethink, Chris Beauchamp, chief market analyst at online trading platform IG, says.
Greed
Greedy investors trade beyond their means, open more positions than usual or hold on to positions too long to chase an even greater gain. “All too often, they incur a heavy loss and may even wipe out the profit already made.
Tip: Ignore the short-term hype, noise and froth and invest for the long-term plan, based on sound fundamentals.
Fear
The risk of making a loss can cloud decision-making. “This can cause you to close out a position too early, or miss out on a profit by being too afraid to open a trade,” he says.
Tip: Start with a plan, and stick to it. For added security, consider placing stops to reduce any losses and limits to lock in profits.
Hope
While all traders need hope to start trading, excessive optimism can backfire. Too many traders hold on to a losing trade because they believe that it will reverse its trend and become profitable.
Tip: Set realistic goals. Be happy with what you have earned, rather than frustrated by what you could have earned.
Frustration
Traders can get annoyed when the markets have behaved in unexpected ways and generates losses or fails to deliver anticipated gains.
Tip: Accept in advance that asset price movements are completely unpredictable and you will suffer losses at some point. These can be managed, say, by attaching stops and limits to your trades.
Boredom
Too many investors buy and sell because they want something to do. They are trading as entertainment, rather than in the hope of making money. As well as making bad decisions, the extra dealing charges eat into returns.
Tip: Open an online demo account and get your thrills without risking real money.
