The Monetary Authority of Singapore (MAS) has debuted Ubin+, a program to test the use of a wholesale central bank digital currency (CBDC) for cross-border foreign exchange settlement.
According to a Thursday (Nov. 3) news release, Ubin+ will study “business models and governance structures for cross-border foreign exchange (FX) settlement, where atomic settlement, based on digital currencies, can improve efficiencies and reduce settlement risks compared to existing payment and settlement rails.”
In addition, MAS says the project will try to come up with technical standards and infrastructure to support currency transactions using distributed ledger technology (DLT), as well as non-DLT-based financial market infrastructures.
“As wholesale digital currencies could potentially gain traction as a cross-border medium of exchange, MAS is studying possible mechanisms to maintain connectivity across CBDC and other heterogenous digital currency networks,” the release said. “MAS will also study the use of smart contracts to optimize efficiency and reduce counterparty risks in the settlement of cross-border transactions.”
Read more: France, Singapore and Switzerland Test Cross-Border CBDC Payments
The news came one day after the launch of Project Marinara, a pilot program that involves the central banks of France, Singapore and Switzerland joining forces to test their experimental central bank digital currencies (CBDCs) and decentralized finance (DeFi) protocols.
In what is to expected be about a six-month trial involving hypothetical CBDCs from each of the three countries — the Swiss franc, the euro, and the Singapore dollar — Project Mariana will test cross-border CBDC trading and settlement, the Bank for International Settlements (BIS) said in a news release.
“This pioneering project pushes our CBDC research into innovative frontiers, incorporating some of the promising ideas of the DeFi ecosystem,” BIS Innovation Hub Head Cecilia Skingsley said in the release. “Mariana also marks the first collaboration across Innovation Hub Centres; expect to see more in the future.”
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