The Bank for International Settlements (BIS) announced yesterday that Australia, Malaysia, Singapore, and South Africa have agreed to test cross-border payments using central bank digital currencies (CBDCs) in late 2021 and early 2022.
The effort has been dubbed Project Dunbar, an apparent reference to Dunbar's number, which states that humans can only maintain 150 stable relationships because our brains are too small to keep track of additional social bonds.
BIS said in the announcement that banks within the four countries would collaborate with the BIS Innovation Hub on "prototypes for shared platforms that will enable international settlements with digital currencies issued by multiple central banks."
The Register noted that none of the four countries participating in Project Dunbar has a working CBDC. That means the results of Project Dunbar could heavily influence their plans moving forward—especially if they're already wary of CBDCs.
As for why any of these institutions should care about CBDCs: "These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks," BIS said, "eliminating the need for intermediaries and cutting the time and cost of transactions."
CBDCs have also grown increasingly popular among other countries. For example, China has reportedly processed over $5.3 billion in transactions with its digital yuan, and the U.S. Federal Reserve is planning to publish a report on a digital USD, too.
Digital currencies also have the backing of the World Bank and the International Money Fund, which along with BIS, published a report in favor of them for G20 in July, so there's growing consensus that CBDCs are the payment method of the future.
That future might arrive quickly: BIS said that it expects to show off a technical prototype of Project Dunbar's shared platforms at the Singapore FinTech Festival in November 2021 and plans to share the project's findings "in early 2022."