BIS Innovation Hub validates the prototype of a multi-CBDC platform for international settlements
The Bank for International Settlements (BIS) Innovation Hub has finalized the design of prototypes for a shared platform that will enable international settlements using multiple central bank digital currencies (mCBDCs).
Developed under his Dunbar Project initiative, which is led by the Singapore Center of the BIS Innovation Hub, this project has verified that financial institutions are able to use CBDCs issued by participating central banks to transact with each other on a shared platform.
The Innovation Center validated the functioning of the prototype using CBDCs issued by the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank.
This, he notes, will reduce reliance on financial intermediaries as well as the costs and time needed to process financial transactions.
The Dunbar project worked through three workflows, one focused on developing high-level functional requirements and project design, and two parallel technical streams that developed mCBDC prototypes for different blockchain technology platforms , especially Corda and Partior.
BIS says the project addressed three key questions. Which entities should be allowed to hold and transact with CBDCs issued on the platform? What steps can be taken to simplify the flow of cross-border payments while taking into account regulatory differences between jurisdictions? And what governance arrangement will give countries the confidence to share critical national infrastructure such as a payment system?
After testing the prototype platform, the Dunbar project team indicated that participating central banks should be allowed to retain control of enforcement rules at the jurisdictional and monetary level, thereby ensuring that the platform operates a governance structure acceptable to each participating central bank. .
Andrew McCormack, Head of the BIS Innovation Hub Center in Singapore, says: “A common platform is the most efficient model for payments connectivity, but it’s also the most difficult to achieve. The Dunbar Project has demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enhanced by robust technological means, laying the foundation for the development of future global and regional platforms.