Malaysia, Australia, Singapore and South Africa’s central banks will conduct a cross-border payment trial using different central bank digital currencies (CBDC) to see if this allows transactions to be settled more cheaply and easily, the banks announced on Sept 2 as reported by Bernama.
Most projects are still in their early stages and are primarily focused on the domestic market, but developing global rules and frameworks for how CBDCs can be used internationally is both technically and potentially politically challenging.
According to a statement from Bank Negara Malaysia, Reserve Bank of Australia, the Monetary Authority of Singapore, the South African Reserve Bank, and the Bank of International Settlements’ Innovation Hub, the latest project aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs.
These platforms would allow financial institutions to transact directly with one another in CBDCs, eliminating the need for intermediaries and reducing transaction time and cost.
The initiative, which will also investigate various technical, governance, and operational designs, is expected to publish its findings in early 2022, according to the statement.
“The multi-CBDC shared platform has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform,” Assistant Governor Fraziali Ismail, Bank Negara Malaysia said in the statement.
