New analysis suggests the eAUD, Australia’s proposed central bank digital currency, could offer big savings across the financial system by cutting collateral and capital held against settlement risk.
, chiefly making payments and settling transactions.
The vast daily sums traded in debt, equity and FX markets means even the smallest efficiency gains can deliver enormous cost savings. So, what are these cost savings, and how big might they be?by Talis Putnins, chief scientist at the Digital Finance Co-operative Research Centre , suggests banks and other financial market participants could save at least several billion dollars a year if a CBDC were introduced for particular purposes.
A CBDC could also reduce costs for banks moving money across borders. This now involves a network of “corresponding” banks, as money flows through different networks to end users in a process that can take days. Consultant Oliver Wyman has estimated $120 billion a year could be saved using CBDC for global cross-border payments; so for Australia, this could amount to a few billion dollars in additional annual savings for banks.
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