The Digital Dollar Project says a pilot carried out with Western Union into the use of CBDCs for cross-border remittances has found a host of potential benefits.
The Digital Dollar Project is the brainchild of former CFTC chair Chris Giancarlo, ex-CFTC chief innovation officer Daniel Gorfine and Pure Storage CEO Charles Giancarlo, who have set up a not-for-profit to encourage research and public discussion about a CBDC.
The project worked with Western Union, BDO Unibank in the Philippines, and Accenture on the latest pilot, designing and configuring a platform using DLT to simulate the payments infrastructure necessary to transfer digital dollars to Philippine pesos.
The partners say that they saw reduced counterparty and credit risk thanks to instant settlement. In addition, CBDC settlement allows for transferring value and message in a single transaction, settled atomically, thereby reducing the cost of capital held in pre-funded accounts.
Meanwhile, a digital dollar increases the accessibility and portability of money in a digital form to benefit the unbanked and underbanked. A verified digital wallet can help reduce fraud, enable faster settlement, harmonise jurisdictional requirements, and minimize failed transactions.
"Through this pilot study, Western Union has identified several advantages for customers and financial institutions, laying the groundwork for ongoing evaluations of the feasibility and viability of utilizing retail CBDCs for cross-border remittances," says Kevin Mole, global head, digital assets, Western Union.