France and Singapore are working together to test cross-border payments with CBDC

The central banks of France and Singapore have cooperate to investigate cross-border applications of central bank digital currencies (CBDCs).

The Bank of France and the Monetary Authority of Singapore (MAS) released a joint statement on their CBDC process on Thursday. The banks said they worked together and successfully conducted an attempt at cross-border payments and clearing with CBDCs. Several different CBDCs, linked by a common network between the two countries, were involved in the experimental transactions.

The test was conducted with the help of JPMorgan’s digital currency division, Onyx, and attempted to simulate cross-border transactions as they would take place in the real world. The Onyx app suite uses a system of automated digital contracts that has helped bring the popularity of things like DeFi into the mainstream. Onyx participated in a similar cross-border CBDC study for the Central Bank of Bahrain back in 2021.

The test is the latest phase of the Banque de France’s wholesale testing program. According to the bank, the project is “the first m-CBDC experiment that applies automated market making and liquidity management capabilities to achieve cross-border settlement and settlement efficiency”. The project is expected to be completed by the end of 2021.

Positive results

According to the report, the process between France and Singapore achieved four key outcomes:

• The first, “to demonstrate the interoperability between different types of cloud infrastructures”, is achieved by setting up blockchain nodes in both the public and private cloud infrastructure in each country.
• Second, the design of the network really gave central banks a clear view of international payments. In the meantime, each country retains “independent control over the issuance and distribution of its own CBDC”.
• The third is the establishment of a new m-CBDC network that combines an automated liquidity pool and market making services. The smart contracts automatically process the transaction between EUR and SGD in real time.
• Finally, the simulation of the experimental m-CBDC network shows that the number of parties involved in processing international transactions can be reduced. The report shows that this can reduce the number of contractual agreements, the KYC burden and all associated costs.

Banque de France’s Director of Infrastructure, Innovation and Payments, Valérie Fasquelle, believes that “By testing the circulation of EUR CBDCs in a network of shared corridors, Banque de France and MAS have tested the possibility of grant membership with other CBDCs around the world “. . This is an opportunity to reach agreements for multiple CBDC models, improve cross-border payments and improve the harmonization of after-sales procedures.

The test is limited to only two banks, but the design of the network allows it to scale and support multiple banks in different jurisdictions.

Annie

According to Beincrypto

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