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Securities finance latest news | NYIC and MAS publish cross-border payments study findings


The New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) at the Federal Reserve Bank of New York have published the results of their Cedar Phase II x Ubin + (Cedar x Ubin +) project. The organizations concluded that DLT is able to support improvements for cross-border multi-currency payments and settlements.

The project investigated the efficiency of distributed ledger technology (DLT) in cross-border multi-currency wholesale payments and settlements, specifically considering the use of composite currencies as a bridge to exchange less widely traded currency pairs. The main weaknesses targeted in the trial were settlement risk, settlement time, and cross-ledger communication.

The simulated payments in the experiment were settled in an automated manner, which required successful implementation of all stages in the cross-currency payment chain. with this approach. The counterparty risk is reduced and the probability of settlement is increased.

Thorough settlement was achieved, on average, in less than 30 seconds, with participants able to see payment success almost immediately.

Central bank currency ledgers were linked for the sake of experiment, allowing each ledger to be customizable in design and operation. By doing so, the need for a central clearing authority or common central network is eliminated.

The experiment was conducted in a test environment and used simulated wholesale central bank digital currencies (CBDCs).

Looking to the future, organizations have highlighted the ability to expand as an area that requires greater attention. The prospect of increasing payments per second and the inclusion of additional currencies backed by central bank ledgers could increase transaction volumes.

Commenting on the findings, Michelle Neal, Head of Markets Group at the Federal Reserve Bank of New York, said: “Cross-border payments are a key railroad to facilitating the functioning of the global economy. Our research collaboration with MAS reveals key opportunities for central bank innovation to play an important role in facilitating payment flows Wholesale globally and improve settlement outcomes.

Adds Leung Seng Cheung, Deputy General Manager Markets and Development at MAS: The Cedar x Ubin+ trial envisions a digital currency landscape of the future where central banks can enable cryptocurrency interoperability for wholesale cryptocurrencies to facilitate more efficient cross-border payment flows including lesser currencies. liquidity, without the need for shared infrastructure.”

The Monetary Authority of Singapore is also working closely with the Innovation Center of the Bank for International Settlement to develop a dossier Digital payments infrastructure that will support many CBDCs.

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