BIS Innovation Hub and central banks of Australia, Malaysia, Singapore and South Africa develop Project Dunbar: R3 participates as a technology partner
R3 is excited to be a technology partner in Project Dunbar—the experimental multi-CBDC platform for international settlements. R3 Sandbox for Digital Currencies, managed and powered by Corda, was utilized to develop a prototype for a shared platform that could enable international settlements using digital currencies issued by multiple central banks.
This week saw the completion of the shared platform which was a collaboration between the Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank.
Led by the Innovation Hub’s Singapore Center, Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions.
The project identified three critical questions:
- Which entities should be allowed to hold and transact with CBDCs issued on the platform?
- How could the flow of cross-border payments be simplified while respecting regulatory differences across jurisdictions?
- What governance arrangements could give countries sufficient comfort to share critical national infrastructure such as a payments system?
The project proposed practical solutions for addressing these issues such as exploring different access models to reduce the reliance on correspondent banks, delineating jurisdictional boundaries while streamlining settlement processes, and designing a governance framework that optimizes universality and autonomy for the stakeholders in the network. These were then validated through the development of prototypes that demonstrated the technical viability of shared multi-CBDC platforms for international settlements.
The project’s findings also affirmed that any such arrangement should be subject to the governance deemed appropriate by central bank participants, including allowing them to retain control of the application of rules on a jurisdictional and currency level.
The details and conclusions of the project were published today in a report that supports the efforts of the G20 roadmap for enhancing cross-border payments, particularly in exploring an international dimension of CBDC design.