R3 and ASEAN network partner on CBDC sandbox for banks and fintechs

As interest in central bank digital currencies (CBDCs) grows around the world, experimentation in digital currencies, too, is increasingly moving beyond the realm of government to the private sector.

The ASEAN Financial Innovation Network (AFIN) is partnering with R3, a global enterprise software firm, on a central bank digital currency (CBDC) sandbox to enable banks and fintechs companies to build and test CBDC applications, according to an announcement.

Fast facts:

• AFIN will launch a new digital currency sandbox on APIX, a cross border, open architecture application programming interface (API) exchange — and R3 will provide selected APIs for building applications using digital currencies. The collaboration will provide financial institutions and fintechs with tools to build CBDC applications for new payment rails and multi-currency payment systems, the statement said.
• The APIs from R3’s sandbox for digital currencies, a platform for CBDC experimentation for regulators and financial institutions will be listed on API exchange APIX starting August.
• AFIN, a non-profit organization, was founded in 2018 by the Monetary Authority of Singapore (MAS), the International Finance Corporation (IFC) and the ASEAN Bankers Association with the aim to drive digital transformation in the banking and financial sectors and improve financial inclusion across the ASEAN region. The Association of Southeast Asian Nations region includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
• David Rutter, R3’s founder and CEO, said in a statement: “CBDC initiatives have gained momentum globally and the ASEAN region is no exception with many central banks, commercial banks and FinTechs advancing the deployment of CBDC pilots, including the long-running Project Ubin in Singapore. With our CBDC APIs available to banks and FinTechs globally on APIX, R3 will support participants from the public and private sectors in driving the development of faster and more secure payment settlements across the world.”
• According to a Bank of International Settlements survey of over 60 central banks, the vast majority — 86% — are exploring CBDCs. Last October, the Bahamas became the first country in the world to launch its own digital currency — the Sand dollar. Across Asia, China, Hong Kong, Japan, South Korea, Singapore and Thailand have also launched projects to explore wholesale and retail use of CBDCs.
• Central banks are increasingly studying the use of CBDCs for cross border payments. The G20 has made enhancing cross-border payments a priority. According to a recent BIS report, 28% of 50 central banks surveyed are studying making CBDCs interoperable by forming multi-CBDC arrangements.