The combined endeavor will develop shared DLT platforms that will allow institutions to settle cross-border transactions using digital currency issued by central banks (CBDCs).
Australia’s, Singapore’s, Malaysia’s, and South Africa’s central banks have announced a cooperative endeavor to test international settlements using digital currencies issued by central banks (CBDCs).
Project Dunbar will test shared systems that will allow direct transactions between institutions utilizing digital currencies issued by a variety of central banks. The results of the pilot will be used to inform the “development of global and regional platforms,” as well as to help the G20‘s cross-border payments strategy.
Project Dunbar will be implemented in collaboration with the Bank for International Settlements (BIS) Innovation Hub, which is based in Singapore. Multiple partners will be involved in the initiative, which will construct various DLT platforms and investigate various architectures that would allow central banks to share CBDC infrastructure.
The efficiency gains associated with distributed ledger technology (DLT)-based payments are highlighted in a joint announcement, which states:
“These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions.”
Michele Bullock, Assistant Governor of the Reserve Bank of Australia (RBA), said that “enhancement of cross-border payments has become a priority for the international regulatory community,” adding that the RBA is “very focused” on the issue in its domestic policy work.
“Project Dunbar brings together central banks with years of experience and unique perspectives in CBDC projects, as well as ecosystem partners at advanced stages of technical development on digital currencies,” said Andre McCormack, the BIS Innovation Hub Singapore Centre’s director. He continued, “
“With this group of capable and passionate partners, we are confident that our work on multi-CBDCs for international settlements will break new ground in this next stage of CBDC experimentation and lay the foundation for global payments connectivity.”
The Reserve Bank of Australia has, on the other hand, continually minimized the necessity for a domestic CBDC, highlighting the success of the New Payments Platform, which permits fast digital transactions 24 hours a day, seven days a week.
During the Singapore FinTech Festival, which will take place in November of this year, Project Dunbar is planned to demonstrate technical prototypes of shared distributed ledger technology platforms. The program plans to publish its final conclusions in early 2022, after which it will close.