New York Fed and Monetary Authority of Singapore Announce Breakthrough Results of Cross-Border CBDC Payment Project

The Federal Reserve Bank of New York’s New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) have published the results of their joint “Project Cedar Phase II x Ubin+.” The project explored the feasibility of using central bank digital currency (CBDC) for wholesale cross-border payments using one or more vehicle currencies. A vehicle currency refers to a highly liquid currency that facilitates the trading of two less liquid currencies.

The joint project builds on existing wholesale CBDC research and focuses on interoperability, atomic settlement, and near real-time settlement. The project envisages a future digital currency landscape where central banks enable interoperability of wholesale CBDCs to facilitate cross-border payment flows, including for less liquid currencies, without requiring a common infrastructure. The project used hashed timelock smart contracts to bridge ledgers on distinct distributed ledger systems to execute simulated cross-border, cross-currency payments, and an “off-chain messaging channel.” Both solutions could work on non-blockchain systems.

The project achieved interoperability using hashed timelock contracts in all test scenarios. Payments settled atomically at an average rate of 6.48 payments per second. End-to-end settlement averaged less than 30 seconds.

Project Ubin is a CBDC exploration started by MAS in 2017, and NYIC was established in partnership with the Bank of International Settlements Innovation Hub in 2021.

J-S Tremblay
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