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.
Discussions around ways to shorten local settlement cycles within the next five years have got most securities firms eyeing localCitiBank’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 of a transaction.
gauges the importance of distributed ledger technology , CBDCs and stablecoins in expediting this transition.87% of the 483 survey respondents and 12 financial markets infrastructures see CBDCs as a viable option for shorter settlement cycles by 2026. The support for CBDCs saw a near 21% increase from securities firms when compared to the previous year.The year-on-year growing support for digital cash is supported by domestic pilots and cross-border initiatives.
“Recent crossborder multi-bank experiments are now providing detailed insights into how central bank funding can be operationalized in a digital context, both internally and across entire markets.” However, over the next years, some of the major roadblocks to widespread adoption of digital assets include regulatory uncertainties, limited knowledge, backward compatibility with traditional financial systems and blockchain interoperabilities, among others, as listed below.
In the coming five years, by 2028, financial aspirations will move beyond T+1, envisions Citibank’s report. Some anticipated changes will include the mainstreaming of DLTs, shorter settlement cycles, digital cash-focused funding mechanisms and removal of core banking systems.
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