This past week was a relatively slow one with regards to Central Bank Digital Currency (CBDC) announcements. There was one development however that caught our attention, which will see various countries work together towards testing the viability of CBDCs in international settlements.
International settlements have long been noted as a perfect means through which CBDCs can be leveraged. Project Dunbar is a pilot program which was recently established to ‘develop prototypes for shared platforms that will enable international settlements with digital currencies issued by multiple central banks’.
While many countries around the world are actively trialing their own CBDCs, this pilot program is taking a different approach. It is a joint effort, compromised of the following entities,
- South African Reserve Bank (SARB)
- Reserve Bank of Australia (RBA)
- Central Bank of Malaysia (CBM)
- Monetary Authority of Singapore (MAS)
- BIS Innovation Hub
The purpose of developing a shared international settlements platform which supports a variety CBDCs is a simple one – it should offer greater transparency, while cutting down on both the cost and time of transactions. This increased efficiency is due primarily to the ability of a CBDCs to render intermediaries unnecessary.
Aside from increased efficiency, it is expected that whatever platform emerges from Project Dunbar will eventually act as a bridge between public and private sector CBDC dealings.
Upon announcing this joint effort, representatives from various project contributors took the time to comment.
RBA Assistant Governor Michele Bullock states, “We are pleased to collaborate with the BIS Innovation Hub and the central bank partners on this important initiative to explore how a shared platform for multiple CBDCs could be used to improve the speed, cost and transparency of wholesale cross-border transactions. Enhancing cross-border payments has become a priority for the international regulatory community and something that we are very focused on in our domestic policy work.”
BIS Innovation Hub Centre Head Andrew McCormack, states, “Project Dunbar brings together central banks with 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.”
Project Dunbar is expected to be a long term pilot, with results not being shared until Q1 of 2022.