Bank of International Settlement (BIS) Innovation Hub has completed an experimental central bank digital currency (CBDC) platform pilot for international settlement with the central banks of Australia, Malaysia, Singapore and South Africa.
The multi-national experimental CBDC project, dubbed Project Dunbar, has been developed to facilitate direct cross-border transactions between financial institutions using multiple currencies connected across multiple central banks.
The joint CBDC pilot was announced in September 2021, and a final report regarding the same was released on Tuesday. The experimental joint CBDC program turned out to be a success and proved financial institutions can use CBDCs issued by central banks to transact directly with each other on a shared platform
The project took several aspects into consideration before developing prototypes. Some of the key issues that the project is trying to solve include resolving cross-border remittance issues in accordance with the regulatory requirements and bringing in key payment infrastructure across national borders.
The project was successful in developing functioning prototypes and demonstrating practical solutions, establishing that the notion of multi-CBDCs was technically realistic. The prototypes proved that the design approaches used to address the three major issues of access, jurisdictional boundaries and governance were effective.
The developers of the project claimed that Project Dunbar illustrated how governance structures enforced by robust technology means can meet important concerns of trust and shared control. Andrew McCormack, head of the BIS Innovation Hub Centre in Singapore, said:
“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.”
Related: BIS joins France and Switzerland’s central banks on cross-border CBDC project
Prior to BIS innovation hub’s multi-CBDC platform, the likes of Switzerland and France experimented with cross-border remittance in a joint venture for a digital euro. Now, the findings of the experimental CBDC program could aid in the adoption of CBDC international settlement for G-20 nations.
With over 95 nations currently working toward their sovereign digital currency, CBDC use for international settlements could become a reality, especially at a time when many governments are already looking to build alternatives for centralized payment gateway like SWIFT.
Source: Coin Telegraph