The Big4 auditor, KPMG, has delivered a report based on data provided by Bank of Canada, Bank of England, Monetary Authority of Singapore and commercial banks HSBC, TD Bank, OCBC Bank and UOB. The researchers put in focus the effectiveness of Real-Time Gross Settlement (RTGS), system that accounts for cross-border interbank payments and settlements.
They found that it looks as outdated and needs to embrace modern financial technological. It’s curious that paper scrutinizes in detail an option of central banks digital currencies (CBDC) as valuable alternative to RTGS but miss to cover cryptocurrencies taking as whole: actually there are no crypto-related words and only two times “blockchain” comes up in 68-page report. This looks as weirdest attempt to omit branding such important FinTech innovations.
The paper’s authors consider three main options. The first one is to raise effectiveness of current payment processing systems as RTGS and SWIFT. The second one is to allow RTGS operators to open accounts in central banks in the currency the specific RTGS operator use. The last one is to launch “digital currency” (actually it’s supposed to be only CBDC).
The last option was tightly connected with central banks and was broken down into three sub-options such as 1) country confined digital currency; 2) digital currency that mat be exchangeable beyond the “home market” – this implies that central banks will hold multiple digital wallets to handle various digital currencies; 3) unified digital currency supported by the currencies’ basket. These three sub-options just highlighted that digital currency in this report is actually CBDC based on central governed blockchain, these CBDC are based on fiat and so bear all risks relating to sometimes wild fiat fluctuations and seem vulnerable in the face of possible severe financial crisis since these “digital currencies” will go down together with fiat in this case.