A new collaboration between the New York Innovation Center (NYIC) of the Federal Reserve Bank of New York and the Monetary Authority of Singapore (MAS) has been confirmed to be targeting research into Retail Central Bank Digital Currencies. major (wCBDC).

This joint experiment seeks to evaluate the possibilities and use cases of wCBDC as a payment for cross-border transactions and, in this case, with the use of multiple currencies (cross-border transactions between currencies).

Ultimately, the project aims to mitigate the settlement risk that has been a problem in cross-border payments.

The experiment that has been called ‘Project Cedar Phase II x Ubin+’ is in different phases that will be developed gradually. It will examine the introduction of wCBDC in improved designs for atomic settlements of these cross-border cross-currency transactions. The interoperability of wCBDC across various networks while maintaining autonomy is crucial to the experiment.

Michelle Neal, Director of the New York Federal Reserve Markets Group, stated: “Experimentation in the central banking community is vital to realizing the full potential of digital assets and CBDCs in particular. Building on Phase I, The Project Cedar Phase II x Ubin+ collaboration will provide greater visibility into the functionality and interoperability of multi-currency ledger networks using their own unique designs.”

Also speaking about the interoperability of these core digital currencies across networks, MAS Deputy Managing Director (Markets and Development) Leong Sing Chiong described, “The project takes a hands-on approach and designs so that any future wholesale CBDCs are interoperable across networks while maintaining each network autonomy.”

New York Fed contributes to CBDC discussions

It is worth noting that the New York Fed placed great emphasis on the fact that the Cedar Phase II x Ubin+ Project is not intended to advance or drive any particular policy outcome.

Furthermore, the entity noted that it does not advocate for a retail CBDC or a wholesale CBDC or dictate the most appropriate design for a central digital currency. You are only making your technical contribution to the broader and more transparent public discussions about CBDCs.

However, the US Federal Reserve has been weighing the pros and cons of a potential digital dollar for some time.

They are considering how beneficial or destructive CBDC will be to the US economy. For now, the collaboration with MAS has led to the discovery that the use of a wCBDC under blockchain technology will speed up the transaction as well as guarantee a level of security for customers.

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