Singapore, Australia, Malaysia and South African central banks have announced they are partnering on the “Dunbar Project” to develop a prototype shared platforms for cross-border transactions using multiple central bank digital currencies (CBDC’s).
The aim of Dunbar is to allow financial institutions in the participating countries (and potentially amongst a wider number of nations too) to issue transactions directly between one another to eliminate the need for settlement intermediaries. This will have the net benefit of speeding up settlements and eliminating many of the costs. Furthermore, it will also provide a framework for exploring various different governance models and designs to allow central banks to develop shared CDBC platforms and remittance infrastructures.
According to the BIS press release, the project will focus initially on the development of a common platform for multi-CBDC settlement.
Dunbar Project Announcement
The Dunbar project was announced by the Bank of International Settlements (BIS) Development Hub, and involves the Reserve bank of Australia, Bank Negara Malaysia, the South African Reserve Bank and the Monetary Authority of Singapore, and will involve multiple technology partners to develop the prototypes on a range of different distributed ledgers.
The G20 group of leading developed nations has made CDBC design part of their “international dimension” financial policy goals, and this multi-national project has the potential to accelerate these outcomes.
Interest in CBDC’s is growing, with around 80% of nation states now reporting that that they are actively investigating and researching central bank digital assets, with India being one of the most recent to announce it could begin trials as early as December.
The Dunbar project aims to publish early results next year, with initial prototypes being demonstrated at the Singapore Fintech Festival in November of 2021. The following are some of the comments by lead members of the project.
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.Andrew McCormack, Centre Head of the BIS Innovation Hub Singapore Centre
“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”
Fraziali Ismail, Assistant Governor of Bank Negara
“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 also very focused on in our domestic policy work,”Michele Bullock, Assistant Governor (Financial System), Reserve Bank of Australia
“Project Dunbar’s work on using multi-CBDC platforms to facilitate seamless multi-currency fund transfers is a significant contribution to the global vision to make payments cheaper and faster. The findings on how a common platform can be governed effectively and managed efficiently will shape the blueprint of the next generation payment systems,”Sopnendu Mohanty, Chief FinTech Officer, Monetary Authority of Singapore
“After years of mostly domestic research and exploration, we are very pleased to see that these common insights about the need to explore cross-border CBDC payments and interoperability are coming together internationally. We are particularly excited to be part of Project Dunbar given the SARB’s role in operating the regional wholesale settlement system in the Southern African Development Community,”Rashad Cassim, Deputy Governor South African Reserve Bank.