BIS joint pilot: institutions can use CBDC for international settlement

The Bank for International Settlements (BIS) Innovation Centre has completed the pilot of an experimental central bank digital currency (CBDC) platform for international settlements in collaboration with the central banks of Australia, Malaysia, Singapore and South Africa.

Dubbed Project Dunbar, the multinational experimental CBDC project aims to facilitate direct cross-border transactions between financial institutions using multiple currencies linked across multinational central banks.

The joint CBDC pilot, announced in September 2021, released its final report on Tuesday. The experimental joint CBDC pilot project was a success, proving that financial institutions can leverage central bank-issued CBDC to conduct transactions directly on a shared platform.

The project considered several aspects before developing the prototype. Some of the key issues the project seeks to address include addressing cross-border remittances in compliance with regulatory requirements, and introducing critical cross-border payments infrastructure.

The project successfully developed a working prototype and demonstrated a practical solution, confirming that the concept of a multi-CBDC is technically achievable. These prototypes demonstrate that the design approach used to address three main issues is effective: access, jurisdictional boundaries, and governance.

The project’s developers claim that Project Dunbar illustrates how governance structures implemented by powerful technological means can address the important issues of trust and shared control. Andrew McCormack, head of the BIS Innovation Centre in Singapore, said:

“Project Dunbar shows that key issues of trust and shared control can be addressed by implementing governance mechanisms through robust technological means, laying the groundwork for the development of future global and regional platforms.”

Countries such as Switzerland and France have also experimented with cross-border remittances in digital euros in a joint venture before the BIS Innovation Center’s multi-CBDC platform. Now, the findings of this experimental CBDC project may help G-20 countries adopt CBDC for international settlements.

With more than 95 countries currently working to develop their own sovereign digital currencies, CBDC for international settlements could become a reality, especially as many governments are already looking for alternatives to building centralized payment gateways such as SWIFT.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bis-joint-pilot-institutions-can-use-cbdc-for-international-settlement/
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