KUALA LUMPUR – A prototype for enabling international settlements using multiple central bank digital currencies (CBDCs) among several countries has just been completed.
Code name Project Dunbar, this initiative was led by The Bank for International Settlements (BIS) Innovation Hub’ss Singapore Centre and is a common platform that enables settlements using multiple CBDCs.
Among the central banks involved are Bank Negara Malaysia (BNM), Reserve Bank of Australia, Monetary Authority of Singapore, and the South African Reserve Bank.
This project is an exercise proving that financial institutions could use CBDCs issued by other participating central banks to transact directly among one another on a shared platform.
According to BNM, this project has the potential to reduce reliance on intermediaries, reduce costs, and reduce time taken to process cross-border transactions.
“The successful completion of Project Dunbar has produced meaningful insights into how a multi-CBDC platform may potentially solve complex issues in the cross-border payment space,” BNM’s assistant governor Fraziali Ismail said.
“The project is a testament to the importance of central bank collaboration in supporting the development of next-generation payment infrastructures. We intend to carry these insights through other proofs-of-concept as we continue our CBDC exploration journey,” he added.
The project was organised along three workstreams: one focusing on high-level functional requirements and design, and two concurrent technical streams that developed prototypes on different technological platforms (Corda and Partior).
“A common platform is the most efficient model for payments connectivity but is also the most challenging to achieve. Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enforced by robust technological means, laying the foundation for the development of future global and regional platforms,” said Andrew McCormack, head of the BIS Innovation Hub Centre in Singapore.
The project’s findings also affirmed that any such arrangement should be subject to the governance deemed appropriate by central bank participants, including allowing them to retain control of the application of rules on a jurisdictional and currency level, said BNM.
The details and conclusions of the project were published today in a report that supports the efforts of the G20 roadmap for enhancing cross-border payments, particularly in exploring an international dimension of CBDC design.
Check out the full report here.
Join our Telegram group for the latest updates!