MAS-backed entity launches sandbox to test central bank digital currency apps

THE Asean Financial Innovation Network or AFIN is launching a new digital currency sandbox so that banks and fintechs can experiment with central bank digital currency applications, or CBDCs, and drive global adoption.

The not-for-profit entity jointly formed by the Monetary Authority of Singapore (MAS), the International Finance Corporation and the Asean Bankers Association has partnered with global enterprise software firm R3 to launch the sandbox on the API Exchange (APIX) platform.

APIX is a cross-border open-innovation platform that serves as a curated global marketplace for application programming interfaces, or APIs, for financial institutions and fintechs.

Select APIs from the R3 Sandbox for Digital Currencies will be available from August. The sandbox runs on the Corda blockchain platform and allows participants to collaborate and evaluate CBDC use cases, as well as to learn, transact and test roll-out strategies.

Developers will also be able to create and edit code, and integrate APIs across solution domains in APIX's marketplace by leveraging the cloud-based integrated development environment.

This collaboration equips financial institutions and fintechs that are part of APIX with tools to build CBDC applications for new payment rails and multi-currency payment systems, AFIN and R3 said in a statement on Wednesday.

MAS' chief fintech officer Sopnendu Mohanty said increasing interest in the deployment of blockchain technologies has created a "strong demand for more efficient international payment settlements compatible with these technologies".

He had posted on LinkedIn in April that Singapore may "soon hear about the commercial launch of a multi-currency payment system for digital currencies". Singapore worked on Project Ubin, a five-year project that looked at models for cross-border payments using blockchain and CBDCs.

The MAS is now partnering the BIS Innovation Hub and the central banking community on a new initiative known as Project Dunbar, to design, develop and test new multi-CBDC models. The BIS Innovation Hub refers to an innovation centre set up by the Bank for International Settlements. One such hub was set up in Singapore in 2019.

There has also been rising interest in CBDCs globally. China, reportedly aiming to be the first major central bank to issue a CBDC, has launched lotteries giving out free online wallets containing digital yuan to winners.

The Bank of Japan has also joined other major central banks, including the US Federal Reserve and the European Central Bank, to look at how such digital currencies backed by central banks can speed up cross-border payments.

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