The Federal Reserve Bank of New York, New York Innovation Center (NYIC), and the Monetary Authority of Singapore (MAS) have announced a partnership aimed at experimenting with Central Bank Digital Currency (CBDC) to improve the efficiency of cross border wholesale payments using multiple currencies. The initiative is part of Singapore’s Project Cedar Phase II x Ubin+, using wholesale Central Bank Digital Currencies (wCBDCs).
The goal is to enhance designs for atomic settlement (instant) of cross-border cross-currency transactions, leveraging wCBDCs as a settlement asset.
Michelle Neal, Head of the Markets Group at the New York Fed, said the experimentation is vital to understand if wCBCDs can improve upon existing processes.
Leong Sing Chiong, Deputy Managing Director (Markets & Development), MAS, stated:
“Project Cedar Phase II x Ubin+ advances global efforts to evaluate the benefits of wholesale CBDCs and help build capabilities for a future financial infrastructure that is open and interoperable. The project takes a practical approach and designs for any future wholesale CBDC to be interoperable across networks, while maintaining each network’s autonomy.”
The two entities noted that the experiment is not intended to advance any specific policy outcome, nor is it intended to signal that the Federal Reserve will make any imminent decisions about the appropriateness of issuing a retail or wholesale CBDC, nor how one would necessarily be designed.
A report on the initiative will be released in 2023.
Singapore, via MAS, has been a leader in the experimentation of leveraging distributed ledger technology to improve upon payments and transfers including cross border activity.