The Central Bank of Singapore, the Monetary Authority of Singapore (MAS), has launched a new blockchain-based project to make the process of cross-border payments efficient using central bank digital currencies (CBDCs).
The Monetary Authority of Singapore is in fact working on the project named Dunbar in a partnership with the Bank of International Settlements (BIS) and this consists of a partnership of other central banks, who are also interested in CBDC development.
BIS has stated that the goal of the project is to create a more efficient, cost-effective, and accessible cross-border payments platform that would allow global economic participation from even to the lowest income level citizens. If Dunbar, as it is thought of from the initiation comes into actuality and the working goes forward properly, then it will connect multiple central banks on a common platform, that will allow them to interact directly with each other 24/7 and provide instant cross-border payments.
The Centre Head for BIS Innovation Hub in Singapore, Andrew McCormack has stated, “A single global settlement platform will be highly efficient, much like how centralized clearing and settlements have enabled domestic payments to be made instantly and often at no cost for consumers.” He through Dunbar wants to illustrate the power and usefulness of a shared CBC settlement platform.
Sopnendu Mohanty, MAS’ Chief Fintech Officer stated the July experiment on a shared platform with France to be groundbreaking and likely to spur the next generation of innovation in CBCDs-based cross-border payments. Mohanty also states that the development of robust digital infrastructure is one of the pillar goals of the MAS which would also help to include in addressing the high cost associated with remittances. He stated, “I think that’s why Singapore is deeply interested in this space, because we truly want to reduce the cost of cross-border payment and using the wholesale CBDC experimental structure, that’s our motivation.”
Earlier, Singapore’s Central Bank has also had other successful CBDCs experiments in the past. In 2019, a collaboration between Singapore’s Ubin project and Canada’s Central Bank Project Jasper resulted in the successful cross-border payment from a local bank in Singapore to another in Canada. In this experiment, both central banks used their own networks, with Singapore on the Quorum blockchain and Canada on the Corda blockchain.
McCornack also added that in a similar way that platforms like Zelle have made it almost free to transfer funds within countries, he believes that a shared CBDC platform could also do the same for cross-border payments. He stated, “A regional settlement platform can enable direct transactions with different currencies, improving (foreign exchange) liquidity and allowing faster and cheaper regional payments.”
It has been noted that other official partners on the Dunbar project are expected to be announced on September 2, 2O21. And it would definitely be assuring to say that if Dunbar becomes successful it is definitely going to be beneficial for everyone.