The Bank for International Settlements (BIS) and central banks, including RBA, BOK, BNM, and MAS, have unveiled Project Mandala to streamline cross-border payments by automating compliance procedures, enhancing transparency, and increasing efficiency. This initiative aims to revolutionize the cross-border transfer of digital assets, aligning with the Financial Stability Board’s priorities and fostering global transaction security.
6 October 2023 – In a significant stride toward enhancing the efficiency of cross-border payments, the Bank for International Settlements (BIS) has joined forces with several prominent central banks, including the Reserve Bank of Australia (RBA), Bank of Korea (BOK), Bank Negara Malaysia (BNM), and the Monetary Authority of Singapore (MAS), to introduce Project Mandala. This ambitious initiative aims to explore the feasibility of integrating jurisdiction-specific policy and regulatory requirements into a unified protocol, automating compliance procedures, and ushering in a new era of transparency, speed, and security in cross-border transactions.
Project Mandala seeks to address one of the most formidable obstacles in the realm of cross-border payments—the divergence of policy and regulatory frameworks across different jurisdictions. These disparities not only escalate the regulatory compliance burden throughout the payment chain but also prolong the time taken for cross-border transactions and introduce uncertainties among stakeholders. The project takes inspiration from the findings of Project Dunbar, which laid the groundwork for an experimental multiple central bank digital currency (mCBDC) platform.
By adopting a compliance-by-design architecture, Project Mandala has the potential to revolutionize the transfer of digital assets, including central bank digital currencies (CBDCs) and tokenized deposits, making the process significantly more efficient. Furthermore, it could serve as the foundational compliance layer for both established and emerging wholesale or retail payment systems. This initiative also encompasses essential measures such as quantifiable and configurable foreign exchange rules, as well as anti-money laundering and countering the financing of terrorism (AML/CFT) measures.
Project Mandala aligns seamlessly with the Financial Stability Board’s (FSB) 2023 priority actions, focusing on the promotion of an efficient legal, regulatory, and supervisory environment for cross-border payments, while steadfastly upholding their safety, security, and integrity. Bank Negara Malaysia’s Assistant Governor, Dr. Norhana Endut, expressed optimism regarding the project, emphasizing its potential to usher in more seamless cross-border transactions globally, while ensuring robust regulatory compliance and transaction security.