By
Tolu Ajiboye
April 17th, 2024
The unveiling of the wholesale CBDCs project comes a day after MAS announced the completion of live tests under project Guardian.
The Monetary Authority of Singapore has unveiled a new initiative, project Ubin+, to lead the exploration of the potential of wholesale CBDCs in cross-border payments.
Project Ubin+ is a spin-off of Project Ubin, a phased multi-year collaborative project that explored the use of Blockchain and Distributed Ledger Technology (DLT) for international payment settlements. It also draws heavily from project Dunbar, which proved that financial institutions could transact directly with one another using CBDCs on a shared platform.
Ubin+ will focus on how using digital currencies can improve efficiency and reduce the settlement risk of existing payment and settlement rails. It will also develop the necessary technical infrastructure to aid the transactions using DLT and non-DLT-based infrastructures. Likewise, it will focus on formulating policy guidelines to improve connectivity, access, and participation in digital currency infrastructure.
Wholesale CBDCs vs Retail CBDCs
While many countries are fixated on retail CBDCs for household transactions, governments focused on wholesale CBDCs are making more rapid progress. This is due partly to support from the Bank for International Settlements. It may also be because wholesale CBDCs offer efficiency gains when used for cross-border transactions.
It’s not just MAS that’s considering the wholesale CBDC. A Board member of the European Central Bank, Fabio Panetta, announced that the ECB was looking into wholesale CBDCs earlier. China has also launched pilot tests of wholesale CBDCs in the past. Most recently, the Reserve Bank of India launched a pilot test for its wholesale CBDC.
It’s noteworthy that MAS recently completed phase 1 of its Project Orchid. Project Orchid explored the potentials and technicalities for a retail CBDC system in Singapore, only to find there were no such needs at the time. The decision to pursue a wholesale CBDC may very well be because there are no indications for its retail version yet.
Projects and Prospects
The unveiling of the wholesale CBDCs project comes a day after MAS announced the completion of live tests under project Guardian. Project Guardian explored potential decentralized finance (DeFi) applications in wholesale funding markets.
Also, MAS announced two new projects for trade finance and wealth management products. Mr. Mohanty noted the firm will continue to focus on products that create the best value for the broadest range of stakeholders.