Project Dunbar: international settlements using multi-CBDCs

Project led by the BIS Innovation Hub in partnership with the Reserve Bank of Australia, Central Bank of Malaysia, Monetary Authority of Singapore, and South African Reserve Bank



♦   Project Dunbar developed two prototypes for a shared platform that could enable international settlements using digital currencies issued by multiple central banks.

♦   The platform was designed to facilitate direct cross-border transactions between financial institutions in different currencies, with the potential to cut costs and increase speed.

♦   The project identified challenges of implementing a multi-CBDC platform shared across central banks and proposes practical design solutions to address them.

♦   The details and conclusions of the project were published 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.  

Improving cross-border payments with multi-CBDCs

Cross-border payments today can be slow and expensive. Unlike domestic payments, where banks can pay each other directly on a single national payments platform, there is no single international platform today for cross-border payments and settlements.

Instead, the correspondent banking model is used, where banks hold foreign currency accounts with each other. A single cross-border payment could pass through multiple correspondent banks, using the foreign currencies held with them. Each leg of the overall transaction takes time and effort to process, with fees levied that add up quickly and are passed on to customers, resulting in slow and costly cross-border payments.

A multi-currency common settlement platform would enable transacting parties to pay each other in different currencies directly, without the need for intermediaries such as correspondent banks.

A multi-CBDC shared platform will enable international settlements on a common platform, streamlining the flow of cross-border payments and making payments faster, cheaper and safer.

Designing and developing a multi-CBDC platform

Project Dunbar brings together the collective knowledge of central banks, commercial banks and technology partners from earlier research and development work on digital currencies, to design and develop a multi-CBDC platform. The primary work took place over nine weeks, with three concurrent workstreams.

Challenges in implementing a multi-CBDC platform

A multi-CBDC platform for international settlements could significantly improve cross-border payments, but there are challenges and questions regarding implementation that need to be addressed.

These critical challenges may have impeded the development of shared international settlement infrastructures previously, but can now be resolved with modern technologies.

Addressing critical challenges

Distributed ledger technologies' decentralisation capabilities and the programmable nature of smart contracts and CBDCs, tied together in a sophisticated platform design, have produced an elegant solution for central banks to share a common settlement infrastructure for cross-border payments

Successful development of prototypes

Project Dunbar worked with R3 and Partior to successfully develop prototypes on the distributed ledger technologies of Corda and Quorum, respectively. The prototypes proved the technical feasibility of implementing a shared multi-CBDC platform. While there are still further questions to be explored and challenges to be resolved, the successful development is a first step towards the vision of a shared platform for international settlements using multi-CBDCs.

The details and conclusions of the project were published 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.