CBDC

Thanks to the following advantages, CBDC changes the existing payment landscape:

Existing payment solutions rely on traditional agent banks and face challenges in further improving cross-border payment efficiency and reducing costs. This is mainly because their settlement processes are relatively complicated, usually involving multiple currencies, entities (such as banks and other clearing institutions, etc.) and infrastructures, and they need to comply with the relevant laws and regulations of various jurisdictions (such as "AML" and "anti-terrorist financing").

At present, many countries and regions have conducted feasibility studies on CBDCs in cross-border transactions.

Based on a common underlying infrastructure, CBDC transactions with transparency, instant settlement and traceability can help open up a new communication channel to connect independent but interrelated business systems, enabling industry participants to improve existing products or launch new products in cross-border applications. For example, the management of CBDC transaction data helps monitor AML and anti-terrorist financing, which is difficult to achieve through the fragmented data of traditional banks and other commercial stakeholders or ecosystems. Therefore, CBDC can simplify enterprise compliance procedures through post-transaction monitoring.

Similar to "cryptocurrencies", CBDCs can be loaded with smart contracts with pre-set business logic ("programmability") to achieve automatic payment. Mutual trust contracts can be established based on CBDCs, with verifiable terms and agreements, and are automatically executed when preset conditions are met. Industry participants verified or credible institutions approved information sources can be used as internal and external trigger conditions for smart contract execution. It can replace error-prone manual intervention procedures such as calculating and confirming payment amounts before transaction execution. CBDCs with pre-set conditions such as verifying the digital identities of both parties can make transactions between merchants and customers more convenient.