The New York-based Federal Reserve Bank’s New York Innovation Center (NYIC) as well as the Monetary Authority of Singapore (MAS) are collaborating to introduce a mutual experiment over the wholesale central bank digital currencies (wCBDCs). Regulatory entities are confident in the trial of the potential of wCBDCs for wholesale payments across borders.

New York Fed and MAS of Singapore Join Forces to Discover CBDCs

The MAS declared to launch Project Cedar Phase II x Ubin+. As per the agenda of the project, MAS and NYIC will be benefitted from wCBDCs in settlements across borders with cross-currency transfers. The target is to evaluate the likely ability of wCBDCs in minimizing settlement-related hazards. Deputy managing director under MAS, Leong Sing Chiong, indicated that the idea of interoperability lies at the experiment’s essence.

The executive disclosed that the approach of the project is practical and it contains the structure to deal with any wCBDC being interoperable through networks, in addition to maintaining the autonomy of each network.

According to the statement, none of the particular policy outcomes will advance any particular policy outcome. It does not signal any forthcoming decisions regarding the issuance of a CBDC on the behalf of the Fed.

A report containing the results of the project is expected to be issued in the coming year. On the 4th of November, a report was published by NYIC on Project Cedar’s 1st phase. In its initial phase, spot transfers were made between diverse currencies existing on diverse ledgers via a permissioned blockchain. This project assists in the activities of the Boston Fed on a CBDC for retail purposes under Project Hamilton.

The respective endeavor is being organized in partnership with the Digital Currency Initiative of the Massachusetts Institute of Technology. Ubin+ counts as the international endeavor of MAS to increase efficiency as well as minimize the hazards of exchange settlements across borders by improving cross-border interoperability and connectivity of the digital currencies to work for wholesale purposes.

Fed Has No Strategy to Introduce a CBDC Even Now

At the moment, the Fed does not have any strategy to release a CBDC, as mentioned by Michelle Neal (the Head of Markets and Executive Vice President at NY Fed) at a Singapore-based presentation. Nonetheless, it has examined the spot settlement of foreign exchange in line with the Federal Reserve’s viewpoint.