Traditionally, SWIFT network is used for international transfer of funds, At times, it takes days. Recently, four central banks of Hong Kong, China, Thailand and the UAE concluded an experiment of money transfer of their digital currencies using distributed ledger. It was facilitated by the Bank for International Settlements (BIS) innovation hub. The transaction happened in seconds. It is a major step of easy and convenient mode of international payments.

As we know, India and Singapore integrated UPI and PayNow — their instant payment system. Here even digital currencies are not used. Then what is the need to have a CBDC-based transfer system?

One reason is that blockchain distributed ledger is capable of producing smart contracts. In traditional payment system, this function is not available.

Secondly, the international payments happen using the US dollar. It may give undue advantage. Non-dollar digital currency can settle the payments, leaving aside US as a counterparty. US would not be using dollar then strategically. BIS could design a stablecoin that runs on a distributed ledger.