The Bank for International Settlement is working with four central banks to enable international settlement with digital currencies.
The BIS Innovation Hub, led by its Singapore centre, will test use of central bank digital currencies for cross-border transactions in collaboration with the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank.
These multi-CBDC platforms will enable financial institutions to conduct cross-border payments with each other in digital currencies issued by the participating central banks. This will reduce the time and cost of transaction settlement and minimise the need for financial intermediaries, according to project participants.
The project, known as Project Dunbar, will work with technology partners to develop prototypes on different distributed ledger technology platforms. This research, conducted in partnership with private and public sector experts in multiple locations, aims to identify the optimal governance and operating model to enable central banks to share CBDC infrastructure.
Project Dunbar’s results will be published in early 2022 and are likely to instruct the design of future platforms for supporting global and regional settlements. This aligns with the G20 roadmap for enhancing cross-border payments.
Andrew McCormack, head of the BIS Innovation Singapore Centre, says: “Project Dunbar brings together central banks with years of experience and unique perspectives in CBDC projects and ecosystem partners at advanced stages of technical development and digital currencies. We are confident that our work on multi-CBDCs for international settlements will break new ground in the next stage of CBDC experimentation and lay the foundation for global payments connectivity.”
Sopnendu Mohanty, chief fintech officer at the Monetary Authority of Singapore, says: “Project Dunbar’s work on using multi-CBDC platforms to facilitate seamless multi-currency fund transfers is a significant contribution to the global vision to make payments cheaper and faster. The findings on how a common platform can be governed effectively and managed efficiently will shape the blueprint of the next generation payments systems.”
Bank Negara Malaysia assistant governor Fraziali Ismail adds: “The multi-CBDC shared platform explored under Project Dunbar has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform. We hope the project will spur greater public-private collaboration to enable fast and frictionless cross-border payments, combining both the benefits of distributed ledger technology and the efficiency of a common platform.”
