• South Africa, Australia, Malaysia, and Singapore CBDC Will Be Tested Across Borders

  • CBDC, also known as central bank digital currency, is a digital token issued by a government. CBDCs are being investigated by a number of governments and central banks around the world. Despite the fact that they are mostly in the hypothetical stage. However, more than 80% of central banks are considering digital currencies.

    On Thursday, the Reserve Bank of Australia announced a collaboration with the Central Banks of Malaysia, Singapore, and South Africa. Project Dunbar is a collaboration that aims to test the use of central bank digital currencies (CBDC) for international settlements.

    Project Dunbar: Experimenting with Cross-Border Payments Using CBDCs

    The Bank for International Settlements Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Singapore Monetary Authority, and the South African Reserve Bank will conduct a cross-border payments trial using various central bank digital currencies (CBDC).

    The purpose of this trial is to see if the CBDC makes transaction settlements cheaper and easier. The project is being led by the BIS Innovation Hub’s Singapore Centre. These multi-CBDC platforms will allow financial institutions to conduct direct transactions in digital currencies issued by participating central banks. As a result, intermediaries are no longer required, and transaction times and costs are reduced.

    The project will collaborate with a number of partners to create technical prototypes on various distributed ledger technology platforms. It will also investigate various governance and operational designs that would enable central banks to share CBDC infrastructure. This access enables it to benefit from the collaboration of experts from the public and private sectors in various jurisdictions.

    The work of Project Dunbar will investigate the international dimension of CBDC design. It will also support the G20 roadmap’s efforts to improve cross-border payments. Its findings, which are expected to be released in early 2022, will help shape the development of future platforms for global and regional settlements. Technical prototypes of the shared platforms will be displayed at the Singapore FinTech Festival in November 2021, developed in collaboration with various technology partners.

    “Improving cross-border payments has become a priority for the international regulatory community, and it is something that we are very focused on in our domestic policy work,” said Michele Bullock, Assistant Governor (Financial System) at the Reserve Bank of Australia.

    Centre Andrew McCormack, Director of the BIS Innovation Hub Singapore Centre, also issued a statement. He believes that this project will “break new ground in this next stage of CBDC experimentation.”

    Other CBDC Projects in the Works

    China’s digital RMB was the first major economy to issue digital currency. In terms of developing a digital yuan, China is several years ahead of most major countries. While the Bank of England, the Federal Reserve, and the European Central Bank are all investigating digital versions of their respective currencies,

    Ghana has also collaborated with a German firm to launch its CBDC project. In a similar vein, the Nigerian government recently collaborated with a Barbados-based FinTech firm on its own CBDC project.

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