The Bank for International Settlements (BIS) – known as the central bank of central banks – said it has completed a project to make prototypes for a common platform enabling international settlements using multiple central bank digital currencies (CBDCs).
Project Dunbar is jointly led by the BIS Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank.
BIS said Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform.
“This has the potential to reduce the reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions,” BIS said.
The project was organised along three work streams: one focusing on high-level functional requirements and design, and two concurrent technical streams that developed prototypes on different technological platforms, Corda and Partior.
The project examined which entities should be allowed to hold and transact with CBDCs issued on the platform, how the flow of cross-border payments could be simplified while respecting regulatory differences across jurisdictions, and what governance arrangements could give countries sufficient comfort to share critical national infrastructure such as a payments system.
“A common platform is the most efficient model for payments connectivity but is also the most challenging to achieve,” said Andrew McCormack, head of the BIS Innovation Hub Centre in Singapore.
“Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enforced by robust technological means, laying the foundation for the development of future global and regional platforms,” he said.
BIS said the project’s findings also affirmed that any such an arrangement should be subject to individual central bank governance, including allowing them to retain control of the application of rules on a jurisdictional and currency level.
The project supports the efforts of the G20 roadmap for enhancing cross-border payments, particularly in exploring an international dimension of CBDC design.
- George Russell