BIS Innovation Hub is testing the use of CBDCs for international payments with four central banks
The Bank for International Settlements works with four central banks to enable international settlement with digital currencies.
The BIS Innovation Hub, managed from its center in Singapore, will work with the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank to test the use of central bank digital currencies for cross-border transactions.
These multi-CBDC platforms will enable financial institutions to make cross-border payments with one another in digital currencies issued by the participating central banks. According to the project participants, this will reduce the time and costs involved in processing transactions and minimize the need for financial intermediaries.
The project, known as Project Dunbar, will work with technology partners to develop prototypes on various distributed ledger technology platforms. This study, carried out in collaboration with experts from the private and public sector across multiple locations, aims to identify the optimal governance and operating model to enable central banks to share the CBDC infrastructure.
The results of the Dunbar project will be released in early 2022 and are likely to guide the design of future platforms to support global and regional settlements. This is in line with the G20 roadmap to improve cross-border payments.
Andrew McCormack, Head of the BIS Innovation Singapore Center, said: “The Dunbar project brings together central banks with years of experience and unique perspectives in CBDC projects and ecosystem partners in advanced stages of technological development and digital currencies. We are confident that our work on multi-CBDCs for international payments in the next phase of the CBDC experiments will break new ground and lay the foundation for global payments connectivity. “
Sopnendu Mohanty, Chief Fintech Officer at the Monetary Authority of Singapore, said, “Project Dunbar’s work on leveraging multi-CBDC platforms to facilitate seamless multi-currency money transfers is an essential contribution to the global vision of making payments cheaper and faster do. The insights into how a common platform can be effectively controlled and efficiently managed will shape the blueprint of the next generation of payment systems. “
Bank Negara Malaysia Deputy Governor Fraziali Ismail added: “The multi-CBDC shared platform examined as part of the Dunbar project has the potential to bypass the old payment arrangements and serve as the basis for a more efficient international settlement platform. We hope that the project will stimulate stronger public-private collaboration to enable fast and smooth cross-border payments, combining both the advantages of distributed ledger technology and the efficiency of a common platform. “
