Thailand-Hong Kong cross-border central bank digital currency (CBDC) project Blockchain is awarded to the ConsenSys firm as was announced Sep. 25. This contract represents the future cross-border payment project between Thailand and Hong Kong.
It is the second implementation phase of the Project Inthanon-Lionrock led by the company. The project itself is a joint initiative meant to create CBDC with a payment network between banks in the two countries.
A CBDC project is the new trend and must-have for any bank that wants to ensure its clients the safety and less time spent on regular transfers. The CBDC project, based on R3’s Corda blockchain platform, aims for the banks to help them create a cross-border corridor between Thai baht and Hong Kong dollars.
It is much safer for the participating banks that transfer funds and operate foreign exchange transactions on a peer-to-peer basis. According to their calculations is expected to cut settlement costs and time.
The smart contracts implemented via the project would perform atomic Payment-versus-Payment (PvP) settlements for foreign exchange. The PvP guarantees that the final transfer of payment in one currency occurs (if the last transfer of payment takes place in another currency).
If the project reaches his goals, payers could directly and immediately settle payments with their payees via CBDC in a DLT network. The infrastructure prevents double-spending with temporal transaction orders in place.
According to the joint statement, the Bank of Thailand (BOT) and the Hong Kong Monetary Authority (HKMA) have agreed to further proceed with partnership research in relevant areas.
Initiated in May 2019 by the HKMA and the BOT, the project’s results were announced back in January this year. And the results showed that there was significant potential to use DLT technology to reduce intermediaries and settlement layers in the current CB transfer process.
Next in line is to build a proof-of-concept, setting up a cross-border corridor between Thailand’s Inthanon and Hong Kong’s Lionrock networks.
ConsenSys could use its enterprise Ethereum stack technologies, prioritizing the scalability, security, and interoperability. The company has previous experience of developing CBDC payment networks in Singapore and South Africa banks.
Worldwide, BOT and the HKMA are not the only banks that are working on cross-border payments projects based on blockchain technology. Who do you think could benefit from such a project.