KUALA LUMPUR: The Bank for International Settlements Innovation Hub (BIS), the Reserve Bank of Australia, Bank Negara Malaysia, Monetary Authority of Singapore and South African Reserve Bank will join forces to test the use of central bank digital currencies (CBDCs) for international settlements.

       Known as "Project Dunbar”, the joint initiative is led by BIS’ Singapore centre with the aim of developing prototype shared platforms for cross-border transactions using multiple CBDCs.

       These multi-CBDC platforms will allow financial institutions to transact 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.

       According to a joint statement today, the parties will work with multiple partners to develop technical prototypes on different distributed ledger technology platforms.

       They will also explore different governance and operating designs that would enable central banks to share CBDC infrastructures, benefitting from the collaboration between the public and private sector experts in different jurisdictions and areas of operation.

       Essentially, Project Dunbar will explore the international dimension of CBDC design and support the efforts of the G20 roadmap for enhancing cross-border payments.

       The results -- scheduled to be published in early 2022 -- will guide the development of future platforms for global and regional settlements.

       Technical prototypes of the shared platforms, developed in collaboration with different technology partners, will be demonstrated at the Singapore FinTech Festival in November 2021.

       BIS centre head Andrew McCormack said Project Dunbar brings together central banks with their years of experience and unique perspectives in CBDC projects and ecosystem partners at advanced stages of technical development on digital currencies.

       "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,” he said.

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

       "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,” he said. - Bernama