The discussion around shortening local settlement cycles within the next five years has led to most securities firms looking into the potential of central bank digital currencies (CBDCs). CitiBank’s latest edition of the Securities Services Evolution whitepaper highlighted India’s recent move to T+1 settlements, which ensures all trade-related settlements conclude within 24 hours. The survey conducted by CitiBank gauged the importance of distributed ledger technology (DLT), CBDCs and stablecoins in expediting this transition.87% of the 483 survey respondents and 12 financial markets infrastructures (FMIs) see CBDCs as a viable option for shorter settlement cycles by 2026. This is a near 21% increase from securities firms when compared to the previous year. Domestic pilots and cross-border initiatives have been conducted to support the growing support for digital cash.However, there are some major roadblocks to widespread adoption of digital assets, such as regulatory uncertainties, limited knowledge, backward compatibility with traditional financial systems and blockchain interoperabilities. Institutional investors, banks and asset managers have the greatest ability to scale and deliver market-wide solutions, a crucial determinant to the widespread adoption of CBDCs, stablecoins and other centrally governable financial instruments.In the coming five years, by 2028, financial aspirations will move beyond T+1, with the mainstreaming of DLTs, shorter settlement cycles, digital cash-focused funding mechanisms and removal of core banking systems. Just a month after India pitched the idea of conducting cross-border payments using its CBDC to 18 central banks, the Reserve Bank of Australia completed its in-house CBDC pilot. The Australian central bank believes that a CBDC may support financial innovation in areas such as debt securities markets, could promote innovation in emerging private digital money sectors and enhance resilience and inclusion within the wider digital economy.
| Information | Details |
|---|---|
| Geography | Asia |
| Countries | 🇮🇳 🇺🇸 🇨🇦 🇦🇺 |
| Sentiment | neutral |
| Relevance Score | 10 |
| People | CitiBank, Reserve Bank of Australia |
| Currencies | CBDC, Bitcoin, Ethereum, Stablecoins, T+1 |
| Securities | None |
