New York Fed And MAS Evaluate wCBDC For International Payments

Monetary Authority of Singapore and Federal Reserve Bank of New York are collaborating to investigate the usage of wholesale CBDCs for international payments.

The alliance will combine MAS’s Ubin+ project with the New York Fed’s Project Cedar’s second phase for a collaborative experiment.

Utilizing wCBDCs as a settlement asset, the initiative will seek to improve designs for atomic settlement of cross-border, cross-currency transactions.

The effort, which comprises creating connection across numerous diverse virtual currency ledgers, intends to drastically minimise settlement risk, a major source of friction in international cross-currency transactions.

A report on the effort will be published the following year, although the New York Fed emphasises that it is not intended to influence particular policy results.

Michelle Neal, head, markets group, New York Fed, says: “Building off Phase I, the Project Cedar Phase II x Ubin+ collaboration will provide further visibility into the functionality and interoperability of multi-currency ledger networks utilising their own unique designs.”

Phase one of Project Ceder simulated a foreign currency spot deal and presented a wholesale CBDC prototype to explore if blockchain technology may enhance cross-border wholesale payment speed, cost, and accessibility.

The experiment determined that payments could be finalised in less than 15 seconds and that the simulated blockchain network supported atomic settlement, meaning that both sides of a transaction may be paid simultaneously or not at all, hence reducing risks.