The central banks of Australia, Singapore, Malaysia, and South Africa are planning to test the use of a shared digital currency platform for international settlements in the hopes of reducing transaction time and costs, IT Pro reported.
The project, named “Dunbar” aims to create a prototype shared platform for cross-border transactions involving multiple Central Bank Digital Currencies (CBDCs). The group expects the platform to enable financial institutions to conduct transactions directly with each other and remove the need for intermediaries. The project will reduce both transaction times and costs.
Also read: What is Central Bank Digital Currency?
Multiple technological partners will collaborate to create “technical prototypes” on various distributed ledger technology platforms. It will also look into various governance and operational models that would allow central banks to share CBDC infrastructures.
Assistant Governor of Malaysian Central Bank Fraziali Ismail said, “The multi-CBDC shared platform explored under Project Dunbar has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform.” The Dunbar project will also look into the “international component” of CBDC design and help the G20 roadmap’s efforts to improve cross-border payments in general.
When can we see some results?
The findings of the project are likely to be released in early 2022. The consortium expects that they will help shape the development of future global and regional settlement platforms. In November 2021, technical prototypes of the shared platforms will also be shown at the Singapore FinTech Festival.
Multiple countries are exploring CBDCs
Recently, IMF warned that accepting cryptocurrency as an official currency is a step too far. However, the emergence of cryptocurrencies has added relentless pressure on central banks to ensure they have a viable alternative before unregulated payment forms take over.
That’s why multiple countries are planning to launch their CBDC. RBI is also planning to launch its CBDC by December 2021.
China has already begun trials of the e-Yuan. The ‘sand dollar’ is already in use in the Bahamas, and Ukraine has passed a law to treat CBDC as equivalent to cash.