The central banks of Australia, Singapore, Malaysia, and South Africa will collectively conduct a cross-border payment trial for international settlements using their respective central bank digital currencies (CBDC).
The latest initiative, also called Project Dunbar, will prototype the shared platforms for cross-border transactions with digital currencies issued by the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, the South African Reserve Bank.
The joint CBDC pilot will allow direct transactions between the financial institutions, all the while cutting costs and increasing efficiency and speed. In turn, the pilot’s findings will be used to “inform the development of global and regional platforms and support the G20 roadmap for improving cross-border payments.”
“These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions,” reads the announcement release.
The initiative will be led by the Bank for International Settlements (BIS) Innovation Hub from its Singapore Center. Andrew McCormack, Centre Head of the BIS Innovation Hub Singapore Centre, said:
“With this group of capable and passionate partners, we are confident that our work on multi-CBDCs for international settlements will break new ground in this next stage of CBDC experimentation and lay the foundation for global payments connectivity.”
In addition to the cross-border payment settlement, Project Dunbar will also look upon the different governance and operating designs to enable the central banks to share their CBDC infrastructures. This entails that the collaboration is beneficial from the public and private sectors in different jurisdictions and areas of operation.
A separate cross-border CBDC trial is currently underway involving central banks from China, Hong Kong, Thailand and the UAE, spearheaded by the Bank for International Settlements (BIS).
Project Dunbar is expected to demonstrate technical prototypes of shared DLT platforms at the Singapore FinTech Festival in November this year. The complete findings are expected to be published in early 2022.