BIS joint pilot: Institutions can use CBDCs for international settlements

Published at: March 22, 2022

Bank of International Settlement (BIS) Innovation Hub has completed an experimental central bank digital currency (CBDC) platform pilot for international settlement with the central banks of Australia, Malaysia, Singapore and South Africa.

The multi-national experimental CBDC project, dubbed Project Dunbar, has been developed to facilitate direct cross-border transactions between financial institutions using multiple currencies connected across multiple central banks.

The joint CBDC pilot was announced in September 2021, and a final report regarding the same was released on Tuesday. The experimental joint CBDC program turned out to be a success and proved  financial institutions can use CBDCs issued by central banks to transact directly with each other on a shared platform

The project took several aspects into consideration before developing prototypes. Some of the key issues that the project is trying to solve include resolving cross-border remittance issues in accordance with the regulatory requirements, and bringing in key payment infrastructure across national borders.

The project was successful in developing functioning prototypes and demonstrating practical solutions, establishing that the notion of multi-CBDCs was technically realistic. The prototypes proved that the design approaches used to address three major issues: access, jurisdictional boundaries, and governance were effective.

The developers of the project claimed that Project Dunbar illustrated how governance structures enforced by robust technology means can meet important concerns of trust and shared control. Andrew McCormack, head of the BIS Innovation Hub Centre in Singapore said:

“Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enforced by robust technological means, laying the foundation for the development of future global and regional platforms,”

Related: BIS joins France and Switzerland's central banks on cross-border CBDC project

Prior to BIS innovation hub’s multi-CBDC platform, the likes of Switzerland and France have also experimented with cross-border remittance in a joint venture for a digital Euro. Now, the findings of the experimental CBDC program could aid in the adoption of CBDC international settlement for G-20 nations.

With over 95 nations currently working towards their sovereign digital currency, CBDC use for international settlements could become a reality, especially at a time when many governments are already looking to build alternatives for centralized payment gateway like SWIFT.

Tags
Blockchain
Business
Central Bank
Cbdc
Bis
Related Posts
German federal bank runs successful blockchain system without a CBDC
Germany’s federal bank, the Deutsche Bundesbank, has run successful tests on a project which bridges the traditional finance infrastructure with blockchain technology. Despite the current global rush by central banks to familiarise themselves with central bank digital currency technology, the testing carried out by the Bundesbank, in conjunction with the Deutsche Börse Group and the German Finance Agency, required the issuance of no CB, or any tokenized money at all. The system reportedly relies on two software modules which form a connection between the Bundesbank’s internal system and distributed ledger technology. Instead of creating a token-based system, the bank simply …
Technology / March 24, 2021
Cypherium CEO Predicts CBDC Cross-Border Payments ‘Soon’
Sky Guo, founder of the Cypherium blockchain, predicts that central bank digital currency cross-border payments will happen “in the next couple years” or “even sooner”. In an interview with Cointelegraph on July 13, Guo said that CBDC development among central banks makes it likely that certain countries in European Union, China and America, will take the lead and experiment with cross-border payments sooner than expected. CBDC cross border challenges Countries around the world are experimenting with CBDC pilots domestically, such as ride-sharing giant Didi signing “a strategic partnership” with the Digital Currency Research Institute of The People's Bank of China. …
Technology / July 16, 2020
BIS Calls for Central Bank Digital Currencies Amid Coronavirus Pandemic
The Bank of International Settlements (BIS) has issued a report arguing in favor of central bank digital currencies (CBDCs) and digital payments amid the COVID-19 pandemic. The bulletin published by the BIS, a 600-member international financial institution representing the central banks of 60 countries, urges central banks to consider developing CBDCs in light of concerns regarding the spread of coronavirus through existing payment methods. BIS warns of COVID-19 transmission via credit card terminals The report notes a significant negative change in consumer attitudes regarding the use of cash in response to the World Health Organization’s (WHO) warning regarding the spread …
Blockchain / April 5, 2020
Swiss central bank tests wholesale CBDC with commercial partners
Switzerland took another step to clarify the roadmap for integrating central bank digital currencies (CBDC) into the current financial system. The Swiss National Bank (SNB), the country's central bank, completed the second phase of Project Helvetia with its partners by integrating wholesale CBDC into the existing back-office systems and processes of five banks, namely Citi, Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS. The Bank for International Settlements and Swiss financial infrastructure service provider SIX joined as partners of SNB in Project Helvetia Phase II, which took place during the fourth quarter of 2021. Envisioned as a multi-phase investigation on …
Adoption / Jan. 13, 2022
‘CBDCs are the natural evolution,’ says HyperLedger director Barbosa
For Daniela Barbosa — general manager of blockchain, healthcare and identity at the Linux Foundation and executive director of Hyperledger — digital currencies and cryptocurrencies have made it among the big banks at the World Economic Forum in Davos. In an interview with Cointelegraph shot against the backdrop of the Swiss Alps, Barbosa explained that in the few years she has attended the WEF, the presence of cryptocurrency companies has steadily grown. What's more, we should not be afraid of central bank digital currencies (CBDCs). “CBDCs are [a]natural evolution of digital dollars and digital currencies.” While the WEF saw calls …
Adoption / June 6, 2022