NYFed and MAS To Bring Cross-border Payments via Wholesale CBDCs

• NY Fed and MAS’s Project Cedar x Ubin+ explore wholesale central bank digital currencies (wCBDCs).
• Project Cedar Phase II x Ubin+ will offer insight into the functionality of a multi-currency ledger.
• Leong Sing Chiong said wCBDCs will help build open financial infrastructures.

The New York Innovation Center (NYIC) of the Federal Reserve Bank of New York and the Monetary Authority of Singapore (MAS) announced Project Cedar Phase II x Ubin+. It is a collaborative experiment to investigate how wholesale central bank digital currencies (wCBDCs) could improve the efficiency of cross-border wholesale payments involving multiple currencies.

FED NY Project Cedar

Test results from the experiment revealed that the #blockchain-enabled payments system settles transactions in fewer than ten seconds on average and that throughput across the system increases as additional currencies are included. #Cryptocurency pic.twitter.com/sTn6ZnCnUY

— The light shines in the darkness (@MatthewLINY) November 4, 2022

Together, the New York Fed and the Monetary Authority of Singapore are investigating ways to improve cross-border payments via wholesale CBDCs.

Project Cedar Phase II x Ubin+ is a joint experiment between the Monetary Authority of Singapore (MAS) and the New York Innovation Center (NYIC) of the Federal Reserve Bank of New York to see how wholesale central bank digital currencies (wCBDCs) might increase the effectiveness of cross-border wholesale payments involving multiple currencies.

By using wCBDCs as a settlement asset, Project Cedar Phase II x Ubin+ will improve designs for atomic settlement of cross-border, cross-currency transactions. By connecting several diverse virtual currency ledgers, the initiative seeks to considerably lower settlement risk, a major source of friction in cross-border transactions using different currencies.

Michelle Neal, head of the markets group New York Fed announced in a conference:

Experimentation throughout the central banking community is necessary to maximize the full potential of digital assets and CBDCs in particular. The Project Cedar Phase II x Ubin+ partnership will offer more insight into the functioning and interoperability of multi-currency ledger networks using their own distinctive designs, building on Phase I.

Similarly, Leong Sing Chiong, Deputy Managing Director (Markets & Development), stated that the Project Cedar Phase II x Ubin+ encourages efforts to examine the benefits of wholesale CBDCs and assists in the development of skills for a future financial infrastructure that is transparent and interoperable. The project takes a realistic approach, planning for any future wholesale CBDC to be cross-network interoperable while maintaining the independence of each network.

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