Could CBDCs help prevent fraud?

finextra.com:

The new PSR rules mean that the reimbursements to victims will occur within five business days and will be split 50:50 between the sending and receiving banks. This has upped the pressure on banks to ensure they are avoiding failing victims of fraud in any way.

We spoke with Gilbert Verdian, CEO of Quant, who has proposed the argument that a system built around CBDCs would allow for fraud to be dealt with in a more effective way than in the current system.

“Fraud happens very quickly and the system we have in place can only deal with fraud after it happens. It’s always reactive, we’re always catching up and we’re throwing billions at it,” Verdian explains.

UK Finance found in its Half Year Fraud Update that fraud fell in the first six months of 2023, being 2% less than the same period in 2022. However, this was still £580 million being stolen, of which £239.3 million was attributed to APP scams.

Yet Verdian proposes the new system would give banks a better view to control fraud, he explains: “The issue is the view that banks have is only what happens within the money that comes in and the money goes out from within the demarcated perimeter. That's the only thing that can see. But when you step back, and you look at the whole aspect of fraud, you see these patterns, you see these trends, you see these anomalies, they can easily identify as fraud, and you can actually tackle it properly.”

Quant worked with the Bank of England and BIS on Project Rosiland. Verdian states that Quant built the “whole infrastructure” around the digital pound and issued it on their tech before opening it up to payment service providers to integrate, including Barclays, Mastercard, Revolut, and Worldpay. Project Rosalind concluded in June 2023.

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