Researchers from the New York Federal Reserve and the Monetary Authority of Singapore report on the interoperability of digital central bank currencies (CBDC) issued on different networks. 

CBDC Interoperability for Cross-Border Transfers Confirmed

The New York Innovation Center (NYIC), in cooperation with the Monetary Authority of Singapore (MAS), confirmed the interoperability of wholesale CBDCs in a large-scale Project Cedar Phase II x Ubin+. A report on the project’s success was published on the Fed’s website.

The joint study found that the use of CBDCs in cross-border payments is possible. For example, the researchers were able to successfully conduct transactions between several public digital currencies that are in different distributed ledgers and use various smart contract technologies. Settlements between such CBDCs were made virtually instantaneously.

The study examined system interoperability, instant settlement finalization capabilities, and various forms of payments. The report indicates that the researchers created a total of eight different scenarios to test the interoperability hypotheses. The instant finalization tests found an average of about 6.5 payments per second, with a maximum peak of 47 payments per second.

The report also notes that the study focused on examining technical issues and doesn’t reflect imminent decisions to issue CBDCs or mandatory adoption of blockchain technology in any particular country.

According to Leong Sing Chiong, Deputy Managing Director of the MAS, the results of Project Cedar Phase II x Ubin+ will create a digital infrastructure that will allow central banks to interconnect wholesale CBDCs for more efficient international payments.

Project Cedar Phase II x Ubin+ was launched in November 2022 and is part of a larger initiative by the New York Innovation Center (NYIC), which is also working with U.S. commercial banks to explore the creation of a unified payment system. 

Author: Molly Wilson
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