Central banks of Australia, Singapore, South Africa and Malaysia will attempt to make cross-border payments with different central bank digital currencies (CBDC) in an effort to determine if international transactions can be made cheaper.
Bank for International Settlements (BIS) announced:
“The Bank for International Settlements Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, Monetary Authority of Singapore, and South African Reserve Bank will join forces to test the use of central bank digital currencies (CBDCs) for international settlements.
Project Dunbar aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs. These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions.”
CBDC are digital currencies that are being explored by central banks and governments around the globe. China is one of the countries that has begun to test its Digital Yaun with a focus to replace cash in circulation.
As most projects are still in their early stages, they are domestically focused. It is also technically and politically difficult to develop global rules and frameworks that will allow CBDCs to be used internationally.