The Central Bank of Singapore explores the use of blockchain technology to realize cross-border payments between multiple CBDCs

The Central Bank of Singapore, the Monetary Authority of Singapore (MAS), has launched a new project based on blockchain technology to simplify the cross-border payment process using Central Bank Digital Currency (CBDC).

MAS is working with the Bank for International Settlements (BIS) on a project called Dunbar, which consists of a consortium of other central banks interested in CBDC development.

The Dunbar project will be developed based on previous experiments involving similar projects involving CBDC under the leadership of the Bank for International Settlements.

In July, it was reported that MAS successfully simulated cross-border transfer transactions between it and French banks. The result of the experiment was to convert Singapore dollar (SGD) CBDC into Euro (EUR) through Quorum .

The Central Bank of Singapore explores the use of blockchain technology to realize cross-border payments between multiple CBDCs

Quorum was created by JP Morgan developers Ethernet Square bifurcation, and in August 2020 is an Ethernet Square acquired developer ConsenSys. The experiment was also supported by Onyx, the blockchain and payment infrastructure division of JPMorgan Chase.

According to the Bank for International Settlements, the goal of the project is to build a more efficient, more cost-effective and more convenient cross-border payment platform that allows the global economy to participate, even for citizens with the lowest income levels .

If successful, the Dunbar project will connect multiple central banks on a common platform, allowing them to interact directly 24 hours a day, 7 days a week, and facilitate instant cross-border payments.

Andrew McCormack, director of the Singapore Bank for International Settlements Innovation Center, pointed out that Dunbar also aims to demonstrate the power and utility of the shared CBDC settlement platform .

“A single global settlement platform will be very efficient, just like centralized clearing and settlement enables domestic payments to be made instantly, and it often does not bring any cost to consumers.”

Mohanty believes that the development of a strong digital infrastructure is one of the goals of MAS, which also includes solving high cost issues related to remittances.

“I think this is why the Singapore government is very interested in this area, because we really want to reduce the cost of cross-border payments and use a large-scale CBDC experimental structure .”

The Central Bank of Singapore explores the use of blockchain technology to realize cross-border payments between multiple CBDCs

It is worth noting that the Bank of Singapore has conducted other successful CBDC experiments in the past.

In 2019, the cooperation between the Singapore Ubin project and the Canadian Central Bank project Jasper enabled a local bank in Singapore to successfully make a cross-border payment to another bank in Canada.

However, in this experiment, both central banks used their own networks, Singapore on the Quorum blockchain and Canada on the Corda blockchain.

Therefore, MAS CEO Sopnendu Mohanty pointed out that the experiment with France on a shared platform in July is groundbreaking and is likely to stimulate further innovation in the field of cross-border payments based on CDBC .

McCornack also added that just like platforms like Zelle can transfer funds almost freely within the country, a shared CBDC platform can also do the same for cross-border payments.

“Regional settlement platforms can enable direct transactions between different currencies, improve (foreign exchange) liquidity, and allow faster and cheaper regional payments.”

It is understood that on September 2, 2020, the Dunbar project will open other official partners.


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