BNM joins forces with Australian, Singapore, South African central banks to test central bank digital currencies

In a statement, BNM says the project, dubbed Project Dunbar, aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs, which will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks. (Photo by Zahid Izzani Mohd Said/The Edge)

In a statement, BNM says the project, dubbed Project Dunbar, aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs, which will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks. (Photo by Zahid Izzani Mohd Said/The Edge)

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KUALA LUMPUR (Sept 2): Bank Negara Malaysia (BNM) said it will be joining forces with the Bank for International Settlements (BIS) Innovation Hub, Reserve Bank of Australia (RBA), Monetary Authority of Singapore (MAS) and South African Reserve Bank (SARB) to test the use of central bank digital currencies (CBDCs) for international settlements.

In a statement, BNM said the project, dubbed Project Dunbar, aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs, which will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks.

It said this will eliminate the need for intermediaries and also reduce the time and cost of transactions.

“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 of 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 payment connectivity,” said BIS Innovation Hub Singapore centre head Andrew McCormack.

BNM assistant governor Fraziali Ismail, meanwhile, said the multi-CBDC platform explored under the project has the potential to “leapfrog the legacy payment arrangements” and serve as the foundation for a more efficient international settlement platform.

“We hope the project will spur greater public-private collaboration to enable fast and frictionless cross-border payments, combining both the benefits of distributed ledger technology and the efficiency of a common platform,” he said.

Those in the project will be working with multiple partners to develop technical prototypes of different distributed ledger technology platforms. 

BNM said the project will also explore different governance and operating designs that enable central banks to share CBDC infrastructure, benefiting from the collaboration between public- and private-sector experts in different jurisdictions and areas of operation.

Project Dunbar will be exploring the international dimension of CBDC design, it said, and support the efforts of the Group of Twenty (G20) road map for enhancing cross-border payments.

The project expects to publish its results in early 2022, which will inform the development of future platforms for global and regional settlements.

Technical prototypes of the shared platforms, which will be developed in collaboration with different technology partners, will be demonstrated at the Singapore FinTech Festival in November 2021.

Lam Jian Wyn