# Facilitate Cross-Border Payments with wCBDC

## About

<table><thead><tr><th width="304">Use Case Category</th><th>Use Case Description</th></tr></thead><tbody><tr><td>wCBDC</td><td><p>This use case involves two banks in different countries leveraging blockchain-based wholesale CBDC to conduct faster and cheaper cross-border payments.</p><p></p><p>Wholesale CBDCs could potentially simplify and expedite cross-border interbank transactions, reducing the need for intermediaries and the associated costs and delays.</p></td></tr></tbody></table>

## 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:**&#x20;

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

## Example Solution Provider

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**Example 1**&#x20;

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.&#x20;
* *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.
