Singapore, Malaysia and Australia Will Test CBDC Prototype

Per a September 2 announcement by Bank of International Settlements (BIS), all hands are on deck among the central banks of Australia, Malaysia, Singapore, and South Africa towards building platforms for a cross-border central bank digital currency project.

The BIS announcement describes that the prototype would enable trans-national transactions among participating central banks with their digital currency. It explains that “these multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions.”

The said prototype would mainly serve wholesale institutional applications rather than retail. The Bank for International Settlement in the Southeast Asia country, Singapore, would lead the project. 

The intention of the participating central banks and their goals focuses on wholesale use cases for the CBDCs. Their main goal is to achieve hitch-free and quicker settlement time on cross-border payments, which has recently been BIS’ central focus.

A recent comment from Christopher Waller, Federal Reserve Governor, describes CBDCs as “a solution in search of a problem,” and Fed Chairman Jerome Powell who said he is uncertain about their benefit. According to him, he is  “legitimately undecided” on their ultimate benefit. 

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