Partnerships could unleash $31 billion blockchain market

The International Monetary Fund has identified central bank digital currencies (CBDCs) as more efficient alternatives to physical cash that promise to lower transaction costs, promote financial inclusion, curb illicit activity and improve the functioning of monetary policy. At the same time, public-private partnerships are crucial to fully realizing this potential.

Commercial banks possess a wealth of knowledge and experience when it comes to customer onboarding, fraud detection and data protection. This makes them good partners for central banks looking to implement or pilot CBDC, especially at the retail level. Central banks will at least want to cooperate with the private sector.

This edition of “Blockchain Payments Tracker®” examines why public-private partnerships play a central role as governments explore blockchain technology use.

Around the Blockchain Payments Space

In response to President Joe Biden’s Executive Order to ensure the responsible development of digital assets, the US Treasury Department and other federal entities recently released a series of reports looking at the benefits of payments innovation.

The reports determined that the development of a US CBDC would be in the national interest and that the use of instant payments should be encouraged to support a more competitive, efficient and inclusive payment environment. The reports also emphasized regulatory protections that allow for responsible innovation and improvement in cross-border payments. The devaluation of African fiat currencies has already fueled interest in cryptocurrencies as alternative stores of value, but public-private partnerships are helping to accelerate adoption as blockchain growth on the continent outpaces many predictions. Even with a patchwork of local regulations, interest in cryptocurrency is higher than anywhere else in the world, with Kenya, Nigeria, South Africa and Tanzania all ranking in the top 20 on the Global Crypto Adoption Index.

For more on these and other stories, visit the Tracker’s News and Trends section.

How interoperability drives blockchain adoption

Blockchain has the potential to revolutionize the payments industry by enabling faster payments, better security and a more affordable option to reduce barriers to financial inclusion. Adopting new technology from scratch is, however, much more challenging than building it into the traditional and existing payment ecosystem.

To get the Insider POV, we spoke to Anish Jain, CEO of WadzPay, to find out how the combination of blockchain innovation with established systems is giving rise to the next revolution in the payments industry.

Bringing wholesale improvements to cross-border payments

As central banks roll out CBDCs for wholesale and retail use cases, public-private partnerships are expected to play a central role. This applies in particular to cross-border payments. With the ability to complete transactions in real-time and at any time, a full-scale multi-CBDC network enabling wholesale payments will greatly improve the efficiency of global cross-border payment systems. Additionally, such a network could save businesses more than $100 billion in transaction fees annually while providing transparency and reducing transaction times.

To learn more about how wholesale CBDC promises faster cross-border payments and innovation, read Tracker’s PYMNTS Intelligence.

About Tracker

This edition of “Blockchain Payments Tracker®“, a collaboration with Algorandexamines why public-private partnerships play a central role as governments explore blockchain technology use.