MAS, NY Fed to experiment on the use of whole CBDCs to enhance cross-border payments

The project aims to significantly reduce settlement risk.

The Monetary Authority of Singapore (MAS) and the Federal Reserve Bank of New York’s Innovation Center (NYIC) will be working together to investigate how wholesale central bank digital currencies (wCBDCs) could improve the efficiency of cross-border wholesale payments involving multiple currencies.

Through Project Cedar Phase II x Ubin+, the parties will enhance designs for atomic settlement of cross-border cross-currency transactions, leveraging wCBDCs as a settlement asset. 

“The effort, which entails establishing connectivity across multiple heterogeneous simulated currency ledgers, aims to significantly reduce settlement risk, a key pain point in cross-border cross-currency transactions,” the MAS said. 

Project Cedar was created to develop a technical framework for a theoretical wCBDC in the Federal Reserve context and aims to contribute to a broad and transparent public dialogue about CBDC from a technical perspective. 

The first phase of the research found that using a wCBDC prototype to facilitate transactions supported by blockchain technology could improve the speed and safety of cross-border wholesale payments. 

Ubin+ is MAS’ collaborative initiative with international partners to improve the efficiency and reduce the risks of cross-border foreign exchange settlement, by advancing cross-border connectivity and interoperability of wholesale digital currencies.