The Bank of International Settlement (BIS) Innovation Hub has completed a pilot central bank digital currency (CBDC) platform pilot for international settlement with central banks in Australia, Malaysia, Singapore and South Africa.
The multinational pilot CBDC project, called Project Dunbar, has been developed to facilitate direct cross-border transactions between financial institutions using multiple currencies linked to multiple central banks.
The joint CBDC pilot was announced in September 2021, and a final report regarding the same was released on Tuesday. The pilot joint CBDC program was successful and proved that financial institutions could use CBDCs issued by central banks to transact directly with each other on a common platform.
The project took several aspects into account before developing the prototype. Some of the key issues that the project is trying to solve include resolving cross-border remittance issues as per regulatory requirements and scaling up of key payments infrastructure across national borders.
The project was successful in developing working prototypes and demonstrating practical solutions, establishing that the notion of a multi-CBDC was technically realistic. The prototype proved that the design approach used to address three key issues: accessibility, jurisdictional boundaries and governance were effective.
The project’s developers claimed that Project Dunbar illustrated how governance structures implemented by robust technology tools can address important concerns of trust and shared control. Andrew McCormack, Head of the BIS Innovation Hub Center in Singapore, said:
“Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms implemented by robust technological means, laying the foundation for the development of future global and regional platforms,”
RELATED: BIS Joins Central Banks of France and Switzerland on Cross-Border CBDC Project
Prior to BIS Innovation Hub’s multi-CBDC platform, Switzerland and France have also experimented with cross-border remittances in a joint venture for the digital euro. Now, the findings of the pilot CBDC program may aid in the adoption of a CBDC international agreement for G-20 countries.
With more than 95 nations currently working towards their own sovereign digital currency, the use of CBDCs for international settlement could become a reality, especially at a time when many governments are already looking to create alternatives to centralized payment gateways such as SWIFT. Looking for
