The BIS Innovation Hub collaborated with central banks from Australia, Malaysia, Singapore, and South Africa to develop two prototypes for an international settlement platform that uses different central bank digital currencies (CBDCs).
“This initial phase of the project successfully developed working prototypes and”
“demonstrated practicable solutions, achieving its aim of proving that the concept of”
“multi-CBDCs was technically viable,”
So, the executive summary of the project report states.
According to the paper, the partnership, dubbed Project Dunbar, focuses on how a common platform including various CBDCs could help make cross-border payments “cheaper, faster, and safer.”
“Led by the Innovation Hub’s Singapore Centre, Project Dunbar proved that financial institutions”
“could use CBDCs issued by participating central banks to transact directly with each other on a shared platform,”
So, BIS says in a March 22 announcement about the project.
“This has the potential to reduce reliance on intermediaries and, correspondingly,”
” the costs and time taken to process cross-border transactions.”
When it comes to settling transactions using a shared platform, the research identified three major problems.
The first concerns issues of access to the platform’s CBDCs, such as whether banks should be able to access CBDCs from countries where they do not have a presence.
Another problem was figuring out how to make cross-border payments as simple as possible while yet adhering to each country’s standards.
Finally, a third problem was devising a governance framework that would allow countries to share their payment infrastructure while also taking national security concerns into account.
“Allowing entities to directly hold and transact in CBDCs from different jurisdictions could reduce”
“the need for intermediaries in cross-border payments, but it would need to be done in a”
“way that preserves the security and resilience of these payments,”
So, Michele Bullock, assistant governor at the Reserve Bank of Australia, says in a statement.
“While there is clearly more work to be done in thinking about the feasibility and design of multi-CBDC platforms,”
“the findings from Project Dunbar provide a good platform for future work in this area.”
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