The Bank of International Settlement (BIS) Innovation Center has completed a pilot project of an experimental central bank digital currency (CBDC) platform for international settlements with the central banks of Australia, Malaysia, Singapore and South Africa.
The multinational CBDC pilot, dubbed Project Dunbar, was designed to facilitate direct cross-border transactions between financial institutions using multiple currencies linked between multiple central banks.
The joint CBDC pilot project was announced in September 2021 and the final report was published on Tuesday. The pilot joint CBDC program has been successful and has proven that financial institutions can use central bank-issued CBDCs to transact directly with each other on a common platform.
Before developing prototypes, the project took into account several aspects. Some of the key challenges the project is trying to address include addressing cross-border remittance issues in compliance with regulations and building key payment infrastructure across national borders.
The project has been successful in developing working prototypes and demonstrating practical solutions, establishing that the multi-CBDC concept is technically feasible. The prototypes proved that the design approaches used to solve the three main problems of access, jurisdictional boundaries, and governance were effective.
The developers of the project said that the Dunbar project demonstrated how governance structures enhanced by robust technological means can address important issues of trust and shared control. Andrew McCormack, head of the BIS Innovation Center in Singapore, said:
“The Dunbar project has demonstrated that the key issues of trust and shared control can be addressed through governance mechanisms enhanced by robust technological tools, laying the foundation for the development of future global and regional platforms,”
Related: BIS joins French and Swiss central banks in cross-border CBDC project
Prior to the advent of the BIS Innovation Center’s multi-platform CBDC platform, countries such as Switzerland and France also experimented with cross-border remittances as part of a joint venture for the digital euro. Now, the results of the CBDC Pilot Program can help in the adoption of an international CBDC calculation for the G-20 countries.
With over 95 countries currently working on their own sovereign digital currency, using CBDC for international payments could become a reality, especially at a time when many governments are already looking for alternatives to a centralized payment gateway like SWIFT.