In a media press release dated November 11, 2022, the Monetary Authority of Singapore (MAS) and the New York Fed announced a collaboration project (Project Cedar) to explore potential enhancements to cross-border payments using wholesale Central Bank Digital Currencies (CBDCs).
Project Cedar will investigate how wholesale central bank digital currencies (wCBDCs) could improve the efficiency of cross-border wholesale payments involving multiple currencies whilst mitigating settlement risk. A report on the findings of this project is expected in 2023.
In his opening address at the Singapore FinTech Festival on 2 November 2022, Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Deputy Chairman of the Monetary Authority of Singapore, said that the MAS would keep an eye out for opportunities and risks that are looming over the horizon presented by technology.
“But there should be no doubt that we are embracing the underlying technologies of distributed ledgers and the potential fully that they have to transform financial markets. In short, we aim to become a centre for innovative and responsible digital asset activities”, Wong said.
While speaking at the Singapore FinTech Festival on November 4, 2022, Michelle Neal, Executive Vice President and Head of the Markets at the New York Fed, said that harnessing the full potential of financial innovation and related technologies will require collaboration across a range of international partners.
“Experimentation across the central banking community is vital to leverage the full potential of digital assets and CBDCs in particular,” Neal said.
The MAS is collaborating on several projects to understand the digital ecosystem better. Project Dunbar, a collaboration between the BIS Innovation Hub Singapore Centre, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank, proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform.
In Project Orchid, the MAS seeks to explore the various design and technical aspects of a retail CBDC system for Singapore. The project investigates the functionalities of a retail CBDC and how it would interact with existing payment infrastructures.
Under Project Guardian, MAS is collaborating with the financial industry to test the feasibility of applications in asset tokenization and Decentralised Finance (DeFi) while managing risks to financial stability and integrity to deepen understanding of the digital asset ecosystem.
In February 2022, the Federal Reserve Bank of Boston (Boston Fed) and the Massachusetts Institute of Technology’s Digital Currency Initiative (MIT DCI), under Project Hamilton, engaged in a research project to explore the CBDC design space and its technical challenges and opportunities.
A number of collaborations are underway at national and international levels to explore opportunities the crypto ecosystem presents.