The Bank for International Settlements (BIS) is set to step up its central bank digital currency (CBDC) pilot program in a cross-border initiative aimed at testing inter-central bank settlements using multiple CBDCs.
The plan is the brainchild of the BIS’s Innovation Hub, which will team up with the four central banks in the Asia-Oceania region, namely the Reserve Bank of Australia (RBA), Bank Negara Malaysia, the Monetary Authority of Singapore, and the South African Reserve Bank.
In a joint press release, the parties stated that the project had been codenamed Dunbar and would “develop prototypes” for “shared platforms” they hope will allow them to make “international settlements with digital currencies issued by multiple central banks.”
They wrote that the pilot system would hopefully “allow direct transactions between institutions,” a measure that they hope will “reduce costs and increase speed.”
The pilot is the latest in a series of Innovation Hub projects that will feed into the creation of a G20 “roadmap for improving cross-border payments.” The G20 and other major economies have recognized that they are lagging way behind crypto when it comes to making fast, low-cost cross-border transactions, and have been hopeful about the role CBDCs could play in addressing the discrepancy.
However, the possibly thorny issue of CDBC interoperability could slow progress, as many CBDC pilots in nations around the world have focused chiefly on domestic use-cases.
Project Dunbar, the BIS hopes, could iron out such wrinkles.
The parties said their results would likely be published “in early 2022,” and would “inform the development of future platforms for global and regional settlements.” The technical “prototypes of the shared platforms,” will go on show earlier than this, however: The BIS wants to put them on display at the Singapore FinTech Festival in November 2021.
The Innovation Hub’s Singapore chief stated that the pilot would “lay the foundation for global payments connectivity,” while Michele Bullock, the Assistant Governor of the RBA stated:
“Enhancing cross-border payments has become a priority for the international regulatory community and something that we are very focused on in our domestic policy work.”
The BIS’ parallel Project Nexus has previously claimed it established a “successful” connection between Singapore and Thailand’s “national payment networks.”
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