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JPMorgan Report Predicts $100 Billion Savings in Cross-Border Transfer Fees for Businesses that Use CBDCs -Breaking

by Mike Robinson

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JPMorgan Report Projects $100 Billon Savings on Cross-Border Transfer Fees by Businesses Using CBDCs

JP Morgan and OliverWyman have released a joint study that shows that central bank digital currencies can be used by global financial institutions to make significant savings over traditional options. This report estimates an annual collective savings of over $100 billion for organizations that use central bank digital currencies (CBDCs) and transaction settlement timelines that are almost immediate, rather than taking days.

CBDCs, digital currencies of sovereign governments that are run on private blockchains centralized in a single location, can be used as a substitute for fiat currency. CBDCs offer all of the advantages of fiat currencies, but without any physical restrictions, settlement delays or high transaction fees. Because CBDCs are built on blockchains, they can move frictionlessly around the world almost instantly – removing time, unnecessary handoffs, and excess costs from country-to-country transfers.

Global corporations transfer more than $23 trillion per year to global money wires. They also pay $120 billion each in transaction fees. The average settlement time is two-to three days. According to the study’s 35-page findings, The research goes on to state that efforts to create a singularly efficient, secure, speedy, and cheap money-moving network globally has been elusive – until blockchain technology made CBDCs a reality.

Courtesy: oliverwyman.com/Unlocking $120 Billion Value In Cross-border Payments

Because several governments are already working on developing their own countries’ CBDCs, the study notes that a digital network would have to be developed that was CBDC agnostic and could handle all flavors of digital sovereign currencies. These authors call it a multi-currency CBDC or mCBDC network. They believe that this would solve these problems and allow for greater efficiency in wholesale transactions.

There are four key factors to consider in order to make an mCBDC-network successful.

  • Design considerations that include data privacy and technology, interoperability and credit extension are key.
  • The development of the necessary building blocks for foreign exchange conversions and settlement, including minting and redeeming CBDCs.
  • Clearly defined guardrails for central banks, commercial banks, service providers…etc.These are the guidelines
  • All participants and all users must agree on a governance framework.

    • It will take several years for an mCBDC network to be operational on a worldwide scale as most CBDCs are being tested by governments.

    To The Flipside

    • This report is an advertisement for JPMorgan, NYSE: which clearly wants the position of being the best CBDC bank.
    • JPM would be able to lease or create its own mCBDC network if it is able. This could give the company a potential monopoly.

    What are the reasons to care?

    JPMorgan’s proposal is a step toward a parallel government-run, centralized blockchain crypto-verse. If that network is built and gains corporate adoption, it’s difficult to imagine that governments won’t try to constrain current public blockchain-based cryptos such as Blockchain, , and .

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