In Brief:
- This project Dunbar aims to develop prototypes for shared platforms for cross-border transactions using multiple CBDCs.
- The experiment could lead to a more efficient global payments platform.
Central Banks of Australia, South Africa, Malaysia and Singapore have announced a joint initiative to test cross border central bank digital currencies (CBDC) payments. The banks would test whether it allows if the transactions are carried out more easily and cheaply.
The banks have code-named the initiative “project Dunbar”. The initiative aims to develop prototypes for a common platform. These prototypes will enable international settlement in digital fiat currencies issued by central banks, BIS said in a release Thursday.
These platforms would enable financial institutions to transact directly with each other in CBDCs. This could eliminate the need for intermediaries and reduce the time and cost of transactions. The initiative will also explore different technical, governance and operating designs.
Project Dunbar’s work will explore the international dimension of CBDC design and support the efforts of the G20 roadmap for enhancing cross-border payments. Technical prototypes of the shared platforms are developed in collaboration with different technology partners. It will be demonstrated at the Singapore FinTech Festival in November 2021.
“The multi-CBDC shared platform … has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform,” Assistant Governor Fraziali Ismail, Bank Negara Malaysia said in the statement.
The results of the study are expected to be released early next year, BIS said. 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.
