- The project developed prototypes to model settlement of international transactions using multiple central bank digital currencies (CBDCs)
- Questions remain about who should be permitted to transact on the platform, how to establish trusted cross‑government payment arrangements, and how to deploy the platform given differing regulatory regimes
In September, the Bank for International Settlements (BIS) Innovation Hub led a collaborative initiative with the Monetary Authority of Singapore, the South African Reserve Bank, the Reserve Bank of Australia, and Bank Negara Malaysia to prototype and test the use of CBDCs for settling cross‑border payments.
The goal was to determine whether government‑backed digital currencies can serve as low‑cost instruments for transfers between the participating jurisdictions. In a newly published report, the four central banks confirmed that the initiative—known as Project Dunbar—proved to be technically viable.
Project Dunbar was designed to reduce reliance on intermediaries that often make cross‑border payments slow and costly. To explore solutions, the project produced two prototype platforms that enable settlement using multiple central bank digital currencies (mCBDCs).
Fraziali Ismail, Assistant Governor of Bank Negara Malaysia, said the project yielded valuable lessons. “The successful completion of Project Dunbar has produced meaningful insights on how a multi‑CBDC platform may potentially solve complex issues in the cross‑border payment space. The project highlights the importance of central bank collaboration in developing next‑generation payment infrastructures. We intend to carry these insights into further proofs of concept as we continue our CBDC exploration,” he said.
Lingering concerns
Despite the technical progress, Project Dunbar identified a number of challenges that must be resolved before an operational multi‑CBDC platform can be deployed. A central concern is the governance and regulation of such infrastructure if it were to be implemented in practice.
Because central banks would likely be the primary transacting parties on a shared platform, policymakers must decide which other actors—such as commercial banks, payment service providers, or nonbank entities—should be allowed to hold and transact CBDCs on that infrastructure.
Equally important is the question of how to enable cross‑border transactions while accommodating divergent regulatory frameworks across jurisdictions. Differences in compliance, supervision, data protection, and anti‑money‑laundering rules complicate technical interoperability and operational design.
Trust and shared control over a critical payments system also remain open issues. Countries must be comfortable sharing core infrastructure and governance arrangements, including dispute resolution, risk management, and contingency procedures.
Andrew McCormack of the BIS noted that once these concerns are addressed, a multi‑CBDC platform could provide a foundation for broader international and regional payment systems. “A common platform is the most efficient model for payments connectivity but is also the most challenging to achieve. Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enforced by robust technological means, laying the foundation for the development of future global and regional platforms,” he said.
Project Dunbar’s prototypes show that technical solutions for multi‑CBDC settlement are feasible. The next steps require focused work on legal frameworks, governance models, participant eligibility, compliance alignment, and operational resilience to translate the prototypes into a practical, trusted cross‑border payments infrastructure.