Yesterday the Monetary Authority of Singapore (MAS) and the New York Innovation Center (NYIC), part of the NY Federal Reserve, announced joint experiments for cross border CBDC, Project Cedar Phase II x Ubin+.
The project will explore the potential efficiencies of using wholesale central bank digital currencies (CBDCs) for cross border payment.
It will particularly investigate the reduction in settlement risk by using wholesale CBDC (wCBDC) as a settlement asset and the interoperability of two networks using different technologies.
“Experimentation across the central banking community is vital to leverage the full potential of digital assets and CBDCs in particular,” said Michelle Neal, Head of the Markets Group at the New York Fed
Last week both central banks made separate announcements. NYIC shared the results of the first phase of Project Cedar which explored a wholesale CBDC for faster settlement. The NYIC was keen to emphasize that this is just a technological research project. No decision has been made to issue a CBDC, nor does the technology hint at any potential direction.
And MAS unveiled Project Ubin+, a three-pronged initiative to explore the use of wholesale CBDC for cross border payments.
Ubin+ also includes Project Mariana to explore DeFi automated market making (AMM) for foreign exchange with the central banks of France and Switzerland. In other words, the automation of foreign exchange with smart contracts that can operate 24/7.
Additionally, MAS is a participant in SWIFT trials for interoperability between DLT and non-DLT based systems. And this latest project is part of its third prong to explore connectivity with other wholesale digital currency networks.
“The project takes a practical approach and designs for any future wholesale CBDC to be interoperable across networks, while maintaining each network’s autonomy,” said Leong Sing Chiong, Deputy Managing Director (Markets & Development), MAS.