The Role of Cloud Computing in Scaling Secure Payment Infrastructures for Digital Finance

Abstract

The modern era of world order is dramatically changed with the growth of innovative and revolutionised instruments for finance and payments.Since the decade of 2000 and especially after the inception of Bitcoin, traditional finance is increasingly being replaced and substituted with decentralized voluntary transactions based upon anonymous cryptocurrencies.In recent years, the concept of a nation-state digital currency has been proposed by several central banks worldwide.Digital currencies that are issued, regulated and controlled by governments are called Central Bank Digital Currencies (CBDCs), which are regarded as an evolution of State controlled monetary and financial instruments, but in a digital fashion.Commonly, CBDCs are expected to be widely adopted as a risk-free alternative payment instrument to instantly settle trades and transactions over interoperable mediums.As the size of capital flows increase through digital means, the actors of government instruments have to make sure that potential pernicious behaviours are deferred.Filtering and checking CBDC base transactions for any suspicious activities are needed to comply with regulatory requirements.Risk profiling and scoring models are required for all parties in international trades and transactions to ascertain if the payment is clear followed by investigating suspicious transactions.Financial resources such as liquidity sources, banking instruments, tax systems and other payment infrastructures are needed to allow endangered flows to contact authorities to prevent or harm unwarranted flows.All actors need therefore adequate financial and technical capacities to ensure that the checking on potential pernicious activities is conducted expeditiously without obstructing the delivery of the cleared transactions.For the country context, there lacks payment and fintech infrastructures to instantaneously read CBDC base transactions and make risk profiles.Risk inventory and analysis models are needed alongside messaging formats to extract, aggregate, burden and track suspicious transactions alike all weapons and fittings.Quite fewer regulators possess this surveillance capacity in comparison to the trade and transaction volume.The number of retail banks may fall below fifty as premature acts risk monitoring at systemically important institutions.With low capacities, the risk checking on CBDC base transactions will become prohibitively off-the-books, time-consuming and regretted.