A cooperative experiment with wholesale central bank digital currencies (wCBDCs) will be launched by the Monetary Authority of Singapore (MAS) and the New York Innovation Center (NYIC) of the Federal Reserve Bank of New York. The potential of the wCBDC for international wholesale payments is being eagerly tested by regulators.
The launch of Project Cedar Phase II x Ubin+ was notified by the MAS on November 11. As part of its framework, NYIC and MAS will use wCBDCs as a settlement asset in international transactions involving several currencies. The goal is to evaluate wCBDC’s potential ability to lower settlement risk.
Deputy Managing Director of MAS Leong Sing Chiong stated that this initiative adopts a pragmatic approach and provides for any prospective commercial CBDC to be compatible across networks while maintaining each network’s sovereignty. The experiment’s central idea, “interoperability,” was essentially stressed by him.
The announcement made it clear that neither Project Cedar Phase II x Ubin+ will not favour any sort of policy-making, nor will it help predict any incoming Federal Reserve decisions about the issuance of a CBDC. However, the project’s conclusions should be published in a report in 2023.
Ubin+ is a global initiative by MAS to better the connection and interoperability offered by commercial digital currencies. They say that the project should help boost efficiency and minimize possible threats to international CBDC settlements.
Michelle Neal, Executive Vice President and Head of Markets at the NY Fed, declared at a presentation in Singapore that the Fed still has no plans to issue a CBDC.