The collaborative effort of MAS and NYIC aims to evaluate the potential use of wholesale CBDCs in international trade.
A joint experiment with wholesale central bank digital currencies will be launched by the Monetary Authority of Singapore (MAS) and the New York Innovation Center (NYIC) of the Federal Reserve Bank of New York. The potential of the wCBDC for international wholesale payments is being eagerly tested by regulators.
The MAS announced the beginning of Project Cedar Phase II x Ubin+ on November 11. As part of its framework, NYIC and MAS will use wCBDCs as a settlement asset in international transactions involving multiple currencies.
The goal is to evaluate CBDC’s potential ability to lower settlement risk. The experiment’s central idea, “interoperability,” was highlighted by Leong Sing Chiong, deputy managing director at MAS:
“The project takes a practical approach and designs for any future wholesale CBDC to be interoperable across networks while maintaining each network’s autonomy.”
According to the statement, Project Cedar Phase II x Ubin+ will not advance any particular policy outcome or signal any impending Federal Reserve decisions regarding the issuance of a central bank digital currency (CBDC). In 2023, a report including the project’s findings needs to be made public.
On November 4th, NYIC published a report on Project Cedar’s initial phase. Spot transactions between different currencies were conducted during the first phase through a permissioned blockchain network with an output model for unspent transaction data.
The Boston Fed’s work on a retail CBDC, which is being done in conjunction with the Massachusetts Institute of Technology’s Digital Currency Initiative, is supplemented by Project Cedar.
Ubin+ is MAS’ global initiative to advance the cross-border connectivity and interoperability of wholesale digital currencies in order to increase efficiency and lower risks associated with cross-border foreign exchange settlement.
Michelle Neal, Executive Vice President and Head of Markets at the NY Fed, stated during a presentation in Singapore that the Fed has looked into foreign exchange spot settlement “from the perspective of the Federal Reserve,” but that it still has no plans to issue a CBDC.
