The Monetary Authority of Singapore (MAS), Reserve Bank of Australia (RBA), Bank Negara Malaysia, and South African Reserve Bank on Thursday said in a joint statement that they were working to build and test the use of central bank digital currencies (CBDCs) for international transactions.  Working alongside the Bank for International Settlements’ (BIS) innovation hub in Singapore, the four central banks would be looking to build prototypes of shared platforms using multiple CBDCs, with the aim to enable financial institutions to transact directly with each other in digital currencies issued by the respective central bank. This would cut out middleman organisations currently used to process such cross-border transactions, slashing overall time and cost.  A major advocate of CBDCs, BIS said such infrastructures had the potential to improve efficiencies in cross-border payments amongst countries that were willing to collaborate. They could do so through varying degrees of integration and cooperation, such as support for common standards and establishing international payment systems. Citing its own research, BIS said 86% of central banks were exploring the potential for CBDCs, while 60% were trying out the technology, and 14% already were running pilots. It explained that CBDC could be used by individuals to pay businesses, shops or each other as well as exchanged between financial institutions to settle trades in financial markets. The new initiative between the four central banks would see the development of technical prototypes on different distributed ledger technology platforms. The partnership would also assess governance and operating frameworks to enable central banks to share CBDC infrastructures across different jurisdictions and modes of operation.   The partners said they were targeting to publish their findings early next year as well as share technical prototypes of the shared platforms – to be developed alongside technology partners – at Singapore’s FinTech Festival in November 2021. RBA’s assistant governor of financial system Michele Bullock said a shared platform for multiple CBDCs would improve the speed, cost, and transparency of wholesale cross-border transactions. Improving such payments has become a priority for the global regulatory community, including Australia, Bullock added.  Bank Negara’s assistant governor Fraziali Ismail said: “The multi-CBDC shared platform has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform. We hope the project will spur greater public-private collaboration to enable fast and frictionless cross-border payments, combining both the benefits of distributed ledger technology and the efficiency of a common platform.” MAS’ chief fintech officer Sopnendu Mohanty added that findings on how a common platform could be effectively governed and managed would drive the design of next-generation payment systems. 

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