A collaboration between national and global central banks is set to investigate the potential of wholesale central bank digital currencies (wCBDCs) to enhance the efficiency of cross-border wholesale payments involving multiple currencies.

The Federal Reserve Bank of New York’s New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) have launched Project Cedar Phase II x Ubin+, a collaboration between NYIC’s Project Cedar CBDC research effort and MAS’ Ubin+ initiative to improve cross-border payments.

The project is set to develop designs for atomic settlement of cross-border cross-currency payments using wCBDCs as a settlement asset and will connect multiple simulated currency ledges in order to lower settlement risk.

“Experimentation across the central banking community is vital to leverage the full potential of digital assets and CBDCs in particular,” Michelle Neal, Head of the Markets Group at the New York Fed, said.

“Building off Phase I, the Project Cedar Phase II x Ubin+ collaboration will provide further visibility into the functionality and interoperability of multi-currency ledger networks utilizing their own unique designs.”

A report around the experiment and findings of Project Cedar Phase II x Ubin+ will be released in 2023.

“Project Cedar Phase II x Ubin+ advances global efforts to evaluate the benefits of wholesale CBDCs and help build capabilities for a future financial infrastructure that is open and interoperable,” Leong Sing Chiong, Deputy Managing Director (Markets & Development) at MAS, said.

“The project takes a practical approach and designs for any future wholesale CBDC to be interoperable across networks, while maintaining each network’s autonomy.”