QX Interoperability - v.0.7
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    • ISO Interoperability Framework
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  • 🏦Use Cases
    • Payments/Digital Asset Transactions
      • Enable transfers of digital payment tokens
      • Conduct Compliant Cross-VASP Digital Asset Transaction
      • Swap NFT for Tokenized Bank Deposits
      • Enable Intra-Group Payments with Tokenised Deposits
    • Wholesale CBDC (wCBDC)
      • Enable Settlement with Simultaneous Delivery versus Payment
      • Facilitate Cross-Border Payments with wCBDC
      • Enable FX transactions to facilitate cross-border payments
      • Settle Crypto Derivatives using wCBDC
      • Access Liquidity via wCBDC
      • Settle Interbank Payments with wCBDC
      • Settle Interbank Payments with wCBDC (Acquirer-Merchant Settlement)
      • Make Property Payments with Tokenized Deposits
      • Provide FX Liquidity using wCBDC
      • Enable Payment versus Payment (PvP)
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      • Aggregate Yields across Blockchains for Corporate Treasuries
    • Retail CBDC (rCBDC)
      • Provide Targeted Government Transfers (Government Vouchers)
      • Streamline Home Equity Lending
      • Provide Corporate Vouchers and Rewards
      • Make Milestone-Based Property Purchase Payments
      • Enable Traceable and Targeted Donations
      • Consumer Prepayments to Corporations
      • Enable Asset Transactions
      • Enable Cross-Border Remittances
      • Government Payouts
      • Managing Learning Accounts
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      • Tokenize and Trade Private Equity Fund Shares
      • Distribute and Settle Private Corporate Debt Issuance
      • Trade Employee Stock Grants as Digital Securities
      • Enable Secondary Trading for Non-Listed Assets and Private Markets
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  • Description
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  1. Use Cases
  2. Wholesale CBDC (wCBDC)

Facilitate Cross-Border Payments with wCBDC

Use Cases

About

Use Case Category
Use Case Description

wCBDC

This use case involves two banks in different countries leveraging blockchain-based wholesale CBDC to conduct faster and cheaper cross-border payments.

Wholesale CBDCs could potentially simplify and expedite cross-border interbank transactions, reducing the need for intermediaries and the associated costs and delays.

Description

Key Stakeholders:

Initiating Bank, Beneficiary Bank

Story:

  1. Bank A needs to make a cross-border payment to Bank B's client.

  2. Both countries have adopted wholesale CBDC systems with agreements for interbank transactions.

  3. Bank A instantly transfers wholesale CBDC to Bank B via the blockchain network.

  4. Bank B either keeps the CBDC or converts to local currency for its client.

  5. Settlement occurs directly without correspondent banks reducing steps, fees and delays.

  6. Payments can also be programmatically converted across CBDCs for different currency requirements.

Postconditions:

Cross-border interbank payments are facilitated in an efficient, cost-effective manner using wholesale CBDC compared to traditional correspondent banking.

Example Solution Provider


Example 1

Bank X is located in Country A, and Bank Y is in Country B. A major corporation that is a client of Bank X has just finalized a deal to purchase machinery from a manufacturer that banks with Bank Y. The deal is worth $10 million.

  • In the traditional banking system: settling this cross-border payment involves multiple intermediaries, including correspondent banks, clearing houses, and possibly currency conversion entities. Each step incurs fees, and the entire process can take several days, if not longer. Additionally, fluctuating exchange rates can introduce cost uncertainties.

  • With Wholesale CBDC: Both Country A and Country B have adopted wholesale CBDC systems, and there's an agreement in place for interbank cross-border transactions using these digital currencies.

Example 2:

  • An investment fund in the U.S. (using Bank A) decides to purchase bonds issued by a corporation in Germany (using Bank B).

  • The investment fund pays in U.S. dollars, but the German corporation expects payment in euros.

  • Using wholesale CBDC, Bank A can instantly transfer the equivalent amount in CBDC to Bank B, which then gets converted to euros for the German corporation. This seamless transaction ensures that the bonds are transferred to the U.S. investment fund while the German corporation receives its payment in euros.

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Last updated 1 year ago

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