The Bank for International Settlements is working with four major central banks to test the use of CBDCs for international settlements.
Platforms for cross-border payments using CBDCs are being created, and the feasibility of using smart contracts and protocols from the DeFi ecosystem is being explored.
Test results will be presented next year.
The Bank for International Settlements (BIS) Innovation Center, together with the Reserve Bank of Australia (RBA), Bank Negara of Malaysia (BNM), the Monetary Authority of Singapore (MAS) and the South African Reserve Bank (SARB) announced a joint project to test the effectiveness the use of central bank digital currencies (CBDCs) in cross-border settlements.
The project was named “Project Dunbar”. As part of the initiative, banks intend to create platforms for performing cross-border transactions using several CBDCs at once. A joint statement from the project participants emphasizes the importance and increased effectiveness of such innovations.
“The multi-CBDC platforms created will allow financial institutions to directly transact with each other in digital currencies issued by the participating central banks. This will eliminate the need for intermediaries and reduce the time and cost of transactions, ”BIS said in a press release.
In addition to developing common platforms, the opportunities that smart contracts provide to create currency settlement products and protocols from the decentralized finance (DeFi) sector will also be explored.
The Singapore division of the BIS Innovation Center will lead the entire project, and the test results will be published in early 2022. At the same time, the developments of the initiative are planned to be presented at the Singapore FinTech festival in November this year.