Australia, Malaysia, Singapore, South Africa to test cross-border use of digital currency

The central banks of Australia, Singapore, Malaysia, and South Africa will test the use of state-issued digital currencies in cross-border payments to establish whether they can simplify transactions and make them cheaper.

The trial would be led by the Bank for International Settlements (BIS) Innovation Hub.

The cooperation between the Reserve Bank of Australia, Monetary Authority of Singapore, Bank Negara Malaysia, and the South African Reserve Bank aims to develop shared platforms for cross-border transactions using different central bank digital currencies (CBDCs).

The prototype platforms should enable direct transactions between financial institutions using sovereign digital currencies, eliminating the need for intermediaries and reduce transaction times and costs.

The participants will explore various designs in terms of technology, governance, and operation.

The four countries' preparation for international experiments places them ahead of those that are still testing their CBDCs in domestic applications.

The multi-CBDC shared platform can surpass the legacy payment arrangements and become a foundation for a more efficient international settlement platform.

The BIS also heads another CBDC project involving central banks from Hong Kong, Thailand, UAE, and China.

Bank of France and the Swiss National Bank also announced a collaboration with BIS to test wholesale digital currencies in cross-border settlements.

The IMF, the World Bank, and BIS recommend that countries collaborate on CBDCs to enhance cross-border payments.