The collaborative effort will develop shared distributed ledger technology platforms that will enable institutions to settle cross-border transactions utilizing central bank-issued digital currencies.
Australia, Singapore, Malaysia, and South Africa’s central banks have announced a collaborative endeavor to test international settlements using central bank digital currencies (CBDCs).
The program, dubbed Project Dunbar, would develop a shared infrastructure that will enable institutions to conduct direct transactions using digital currencies issued by several central banks. The pilot’s findings will inform the “development of global and regional platforms,” as well as the G20’s plan for strengthening cross-border payments.
Project Dunbar will be implemented in collaboration with the Bank for International Settlements (BIS) Innovation Hub, which is based in Singapore. The project will collaborate with many partners to establish distinct DLT platforms and to test various designs enabling central banks to share CBDC infrastructure.
A joint announcement highlights the efficiency gains associated with payments powered by distributed ledger technology (DLT), stating:
“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.”
Michele Bullock, Assistant Governor of the Reserve Bank of Australia (RBA), stated that “improving cross-border payments has emerged as a priority for the international regulatory community,” adding that the RBA is “very focused” on the issue in its domestic policy work.
“Project Dunbar brings together central banks with extensive expertise and distinct perspectives on CBDC projects, as well as ecosystem partners at advanced stages of technological development on digital currencies,” said Andre McCormack, head of the BIS Innovation Hub Singapore Centre. He continued:
“With the support of this group of capable and committed partners, we are optimistic that our work on multi-CBDC international settlements will pave the way for the next stage of CBDC experimentation and create the groundwork for global payments connectivity.”
The RBA has always argued against the establishment of a domestic CBDC, citing the success of the New Payments Platform, which enables rapid digital payments 24 hours a day.
Project Dunbar is anticipated to present technical prototypes of shared distributed ledger technology platforms during this year’s Singapore FinTech Festival in November. The program intends to publish its findings in their entirety in early 2022.
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