The Bank for International Settlements has enlisted the central banks of Malaysia, Singapore, South Africa and Australia to test the use of central bank digital currencies (CBDCs) for international settlements.
Dubbed Project Dunbar, the initiative will develop prototype shared platforms for cross-border transactions using multiple CBDCs, eliminating the need for intermediaries and cutting the time and cost of transactions.
The project will work with multiple partners to develop technical prototypes on different distributed ledger technology platforms. It will also explore different governance and operating designs that would enable central banks to share CBDC infrastructures
Technical prototypes of the shared platforms will be demonstrated at the Singapore FinTech Festival in November 2021.
Sopnendu Mohanty, chief fintech officer at 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 payment systems.”
A separate BIS-led project exploring using CBDCs for cross border payments is also underway involving central banks from China, Hong Kong, Thailand and the UAE.