The central banks of Australia, Malaysia, Singapore, and South Africa alongside the Bank for International Settlements (BIS) have jointly developed prototypes for a common platform enabling international settlements using multiple central bank digital currencies (CBDCs).
The central banks commenced work on the project, Project Dunbar, as a common platform for international settlements using CBDCs in order to theoretically bring about significant improvements to cross-border payments, much like how national payments systems have made domestic payments seamless, instant and low cost in many countries.
According to the central banks, Project Dunbar has confirmed that the use of such a platform is technically viable. The financial institutions found, however, that implementing one single global platform was unlikely.
"Given the complexity of having multiple central banks sharing critical financial infrastructures and the unique requirements of each jurisdiction, a common multi-CBDC platform may be more likely to be implemented as a series of regional platforms rather than as a single global platform," the BIS said.
In light of this finding, the BIS said it now has more questions than answers in terms of how to best implement a multi-CBDC platform that has the appropriate safety and governance frameworks.
"As one of the first technical experiments in the nascent space of multi-CBDCs, Project Dunbar focused as much on identifying problems as on solving them, and ended with more questions than answers -- and with more questions than before it started," the BIS said.
The BIS said there are still questions around how to fulfil anti-money laundering rules, provide access to the CBDCs "beyond banks," create interoperability between various multi-CBDC platforms, as well as what technical trade-offs apply for different types of platforms.
Reserve Bank of Australia assistant governor Michele Bullock, meanwhile, said more work needed to be done in thinking about the design of multi-CBDC platforms so they preserve the security and resilience of payments.
Central banks around the world are increasingly looking into the viability of CBDCs amidst a growing cryptocurrency scene. Some 83 countries are exploring or experimenting with CBDCs, according to analyst Gartner. China has led the field by creating its own CBDC platform, which has distributed more than $5 billion of its "digital yuan" CBDC to people since June 2021.