New York Fed collaborates with Singapore MAS to explore CBDCs

A joint effort aims to assess the possible use of wholesale central bank digital currencies in cross-border transactions.

The Federal Reserve Bank of New York's New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) will launch a joint experiment with Wholesale Central Bank Digital Currencies (wCBDC). Regulators want to test the potential of wCBDCs for cross-border wholesale payments.

On November 11, MAS announced the launch of the Cedar Phase II x Ubin+ project. As part of it, NYIC and MAS will use wCBDCs as a settlement asset in cross-border currency transactions. The objective is to assess the wCBDC's potential ability to reduce settlement risk.

Leong Sing Chiong, Deputy General Manager of MAS, emphasized the concept of "interoperability", which is at the heart of the experience:

"The project takes a hands-on approach and envisions that any future wholesale CBDCs should be interoperable across all networks, while maintaining the autonomy of each network."

As the statement says, Project Cedar Phase II x Ubin+ will not advance any specific policy outcomes, nor does it signal any impending decision on the issuance of a central bank digital currency (CBDC) by the Federal Reserve. A report containing the findings of the project is expected to be published in 2023.

On November 4, NYIC released a report on the first phase of the Cedar project. During the first phase, spot transactions were made between different currencies on different ledgers via a permissioned blockchain network with an unspent transaction data output model.

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