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Australia, Malaysia, Singapore, and South Africa partner on shared digital currency platform

Reserve banks will test the use of central bank digital currencies for international settlements

2 Sep 2021

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The reserve banks of Australia, Singapore, Malaysia, and South Africa are set to test the use of central bank digital currencies (CBDCs) for international settlements in the hopes that it will reduce the time and costs for these types of transactions.

The project, named "Dunbar", aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs. The group hopes the platforms will allow financial institutions to issue transactions directly with each other using digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions.

The project, led by the Bank of International Settlement’s Innovation Hub and involving the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, and the South African Reserve Bank, will involve multiple technology partners to develop “technical prototypes” on different distributed ledger technology platforms.

It will also explore different governance and operating designs to allow central banks to share CBDC infrastructures.

"The multi-CBDC shared platform explored under Project Dunbar has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform,” said assistant governor Fraziali Ismail from Bank Negara Malaysia.

“We hope the project will spur greater public-private collaboration to enable fast and frictionless cross-border payments, combining both the benefits of distributed ledger technology and the efficiency of a common platform.”

The project also aims to explore the “international dimension” of CBDC design and support the efforts of the G20 roadmap for enhancing cross-border payments more broadly.

Its results are expected to be published in early 2022 and the group hopes this will inform the development of future platforms for global and regional settlements. Technical prototypes of the shared platforms will also be demonstrated at the Singapore FinTech Festival in November 2021.

In June, the Hong Kong Monetary Authority (HKMA) announced it was exploring the possibility of launching a centralised digital currency as part of its “Fintech 2025” strategy. Chief executive Eddie Yue revealed it would begin a comprehensive study on e-HKD to understand its use cases, benefits, and related risks.

The HKMA also revealed it would continue to work with the People’s Bank of China in supporting the technical testing of e-CNY, China’s digital yuan, in Hong Kong with the aim of providing a convenient means of cross-boundary payments for domestic and mainland residents.