Institutions can use CBDCs for international settlements
The Bank of International Settlement (BIS) Innovation Hub has completed an experimental pilot of a central bank digital currency (CBDC) platform for international settlement with the central banks of Australia, Malaysia, Singapore and South Africa.
Dubbed Project Dunbar, the multinational experimental CBDC project was designed to facilitate direct cross-border transactions between financial institutions using multiple currencies linked through multiple central banks.
The joint The CBDC pilot was announced in September 2021, and a final report regarding the same was released on Tuesday. The experimental joint CBDC program proved to be a success and proven financial institutions can use CBDCs issued by central banks to transact directly with each other on a common platform
The project considered several aspects before developing prototypes. Some of the key issues that the project seeks to solve include resolving cross-border remittance issues in compliance with regulatory requirements and deploying key payment infrastructure across national borders.
The project was successful in developing working prototypes and demonstrating practical solutions, establishing that the idea of multi-CBDCs is technically realistic. The prototypes demonstrated that the design approaches used to address three key issues: access, jurisdictional boundaries, and governance were effective.
The project’s developers claimed that Project Dunbar demonstrated how governance structures enforced through robust technology means can meet important concerns of trust and shared control. Andrew McCormack, Head of the BIS Innovation Hub Center in Singapore said:
“Project Dunbar has demonstrated that the key concerns of trust and shared control can be addressed through governance mechanisms enforced through robust technological means, and has laid the foundation for the development of future global and regional platforms.”
Related: The BIS joins the central banks of France and Switzerland in a cross-border CBDC project
Before the multi-CBDC platform of the BIS Innovation Hub, e.g Switzerland and France have also experimented with cross-border transfers in a joint venture for one digital euro. Now, the results of the experimental CBDC program could help in the adoption of an international CBDC regime for G-20 countries.
With over 95 nations currently working on their sovereign digital currency, using CBDC for international settlements could become a reality, especially at a time when many governments are already looking to build Alternatives to centralized payment gateways like SWIFT.
https://cointelegraph.com/news/bis-joint-pilot-institutions-can-use-cbdcs-for-international-settlements Institutions can use CBDCs for international settlements