The Bank for International Settlements (BIS) has completed a new feasibility study on central bank digital currencies that aimed to identify the challenges of payments with multiple different currencies, it announced on Tuesday.
Called Project Dunbar, the study was conducted with the central banks of Australia, Malaysia, Singapore, and South Africa, who together tested two prototypes for a shared platform with support from the innovation hub of BRI in Singapore, it said in a statement.
The platform has been designed in a way to facilitate direct cross-border transactions between multiple financial institutions in different currencies, which could potentially reduce their costs and accelerate the speed at which they are carried out, says the BIS.
"This project has identified three critical issues," says the institution considered the central bank of central banks.
The first is which entities should be allowed to hold central bank digital currencies and transact on this platform.
The second is to understand how to simplify cross-border payment flows while respecting regulatory differences from one country to another.
The third is to assess the necessary arrangements in terms of governance so that the different countries are comfortable enough to share critical national infrastructures such as a payment system, lists the BRI.
The implementation of a digital version of currencies, such as a potential digital version of the euro or the dollar, is a major project for the future for central banks as digital payments and cryptocurrencies such as bitcoin are in booming.
The BIS has launched several experiments on these currencies, in particular with the Banque de France and the Swiss National Bank, including the "Jura Project", in reference to the mountain range that separates France and Switzerland, to test international payments in central bank digital currencies on a distributed ledger.
Last year, the Banque de France carried out no less than nine experiments, including one relating to an issue of digital bond securities, paid for in digital currency.
In early March, US President Joe Biden for his part signed a decree to cautiously launch work on a potential digital dollar, asking the Ministry of the Economy to submit a report to him within six months on "the future of money".