28 April 2022

On 22 March 2022, the Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore (“MAS”), and the South African Reserve Bank announced the completion of prototypes for a common platform enabling international settlements using multiple central bank digital currencies (“multi-CBDCs”).

The details and conclusions of the project were published in a report titled “Project Dunbar - International settlements using multi-CBDCs”. The project supports the efforts of the G20 roadmap for enhancing cross-border payments, particularly in exploring an international dimension of CBDC design.

Led by the Innovation Hub’s Singapore Centre, the project proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. MAS states that this has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions.

The project was organised along the workstreams focusing on high-level functional requirements and design, and concurrent technical streams that developed prototypes on different technological platforms (Corda and Partior).

The project also identified three critical questions: (1) Which entities should be allowed to hold and transact with CBDCs issued on the platform? (2) How could the flow of cross-border payments be simplified while respecting regulatory differences across jurisdictions? (3) What governance arrangements could give countries sufficient comfort to share critical national infrastructure such as a payments system?

The project proposed practical solutions for addressing these issues, which were validated through the development of prototypes that demonstrated the technical viability of shared multi-CBDC platforms for international settlements. The project’s findings also affirmed that any such arrangement should be subject to the governance deemed appropriate by central bank participants, including allowing them to retain control of the application of rules on a jurisdictional and currency level.