NY Fed and MAS Explore Wholesale CBDCs for Cross-Border Payments

Project Overview

The New York Innovation Center (NYIC) of the Federal Reserve Bank of New York and the Monetary Authority of Singapore (MAS) have launched Project Cedar Phase II x Ubin+, a collaborative experiment to explore the use of wholesale central bank digital currencies (wCBDCs) in improving cross-border wholesale payments. This initiative aims to address inefficiencies in multi-currency transactions by leveraging blockchain technology.

Key Features and Benefits

The project focuses on creating a multi-currency ledger to facilitate atomic settlement of cross-border, cross-currency transactions. By connecting diverse virtual currency ledgers, it seeks to reduce settlement risk, a major challenge in international payments. Test results from the experiment revealed that the blockchain-enabled system settles transactions in under ten seconds on average, with throughput increasing as more currencies are added.

Insights from Leaders

Michelle Neal, head of the markets group at the New York Fed, emphasized the importance of experimentation within the central banking community to unlock the full potential of digital assets and CBDCs. She highlighted how this partnership will provide deeper insights into the functionality and interoperability of multi-currency ledger networks.

Leong Sing Chiong, Deputy Managing Director at MAS, noted that the project encourages efforts to explore the benefits of wholesale CBDCs. It also supports the development of skills for building a future financial infrastructure that is transparent, interoperable, and cross-network compatible.

This initiative underscores the growing interest in CBDCs as a solution for enhancing global payment systems, fostering collaboration between central banks and financial institutions.