Led by the Innovation Hub's Singapore Centre, Project Dunbar demonstrated that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. This has the potential to "reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions".

Project Dunbar, which will be led by the Innovation Hub’s Singapore Centre, aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs. The 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 project will work with multiple partners to develop technical prototypes on different distributed ledger technology platforms. It will also explore different governance and operating designs that would enable central banks to share CBDC infrastructures, benefitting from the collaboration between public and private sector experts in different jurisdictions and areas of operation.  

Project Dunbar will explore the international dimension of CBDC design and support the efforts of the G20 roadmap for enhancing cross-border payments. Its results, expected to be published in early 2022, will inform the development of future platforms for global and regional settlements. 

She said:

"In Malaysia, mobile banking transactions have multiplied greatly, from around 500 million transactions in 2016 to almost 1.3 trillion transactions in August this year. The ubiquity of mobile internet and increasing dependency on our smartphones is expected to increase the importance of this medium.

"This technology fosters financial inclusion and offers potential for greater customer engagement. One such potential is in meeting and strengthening know-your-customer requirements. By leveraging on technology, financial institutions will be able to conduct e-KYC with greater efficiency while making the customer experience more seamless. One such solution is being tested in the Bank's FinTech sandbox.

"Another area of growth comes from virtual assets. Between the end of 2016 to date, market capitalisation of virtual assets have grown by an extraordinary rate of over 1000% from around USD 20 billion to around USD 200 billion.

"While the technologies behind virtual assets may present great potential to revolutionise the way we conduct finance, the risks associated with virtual assets is an area that deserves much scrutiny. Features that may allow anonymous or pseudonymous transactions and easier cross-border transfers of values carry money laundering and terrorism financing risks that need to be addressed. The fact that the reason for many virtual currencies is to skirt the formal financial system adds further to the reservations of many."