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The Bank for International Settlements (BIS) Innovation Hub and the South African Reserve Bank have announced the completion of a prototype system enabling international settlements using central bank digital currencies.

Nicknamed ‘Project Dunbar’, the prototype system allows direct transactions in central bank digital currencies, or CBDCs, between institutions, while reducing time and cost.

This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions, the South African Reserve Bank said in a statement on Tuesday (22 March).

The Reserve Bank of Australia, Bank Negara Malaysia, and the Monetary Authority of Singapore also took part in the project.

Unlike domestic payments, where banks can pay each other directly on a single national payments platform, there is currently no single international platform for cross-border payments and settlements leveraging CBDCs.

Today, the correspondent banking model is used, where banks hold foreign currency accounts with each other. To complete a single cross-border transfer, multiple correspondent banks may be involved, with transactions recorded on multiple ledgers on multiple systems built on different technologies and communicating in different message formats.


This fragmented network results in cross-border payments being generally slower, opaque and more expensive compared with domestic payments.

A single cross-border payment might pass through multiple correspondent banks using the foreign currencies held with them. Each leg of the overall transaction takes time and effort to process, with fees levied that add up quickly and are passed on to customers, resulting in slow and costly cross-border payments.


“Even though multi-CBDC exploration is at its infancy, Project Dunbar highlights the possibilities of using multiple CBDCs issued on a shared platform for international settlement,” said Rashad Cassim, deputy governor of the South African Reserve Bank.

“While many unknowns remain, and a number of areas still require further investigation, it is only through our collective understanding and journeying together that we can meaningfully contribute to the G20 roadmap for enhancing cross-border payments. We are privileged to be part of this pioneering piece of work.”


The South African Reserve Bank has previously tested a digital currency for local use as part of its Project Khoka programme, which looked at using blockchain technology to speed up payment systems in the country.

Source: Businesstech

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