BIS and Central Banks Collaborate on Cross-Border Regulatory Compliance Protocols

  • October 06, 2023


Bis and central bank collaborate on cross-border regulatory complaince protocols

  • Project Mandala aims to streamline compliance procedures, enable real-time transaction monitoring, and enhance transparency and visibility regarding country-specific policies.

  • The project investigates the viability of encoding policy and regulatory prerequisites into a standardized protocol.

  • This collaborative initiative involves the BIS Innovation Hub (BISIH) Singapore Centre, the Reserve Bank of Australia (RBA), the Bank of Korea (BOK), the Bank Negara Malaysia (BNM), and the Monetary Authority of Singapore (MAS), in conjunction with various financial institutions.

  1. On October 5, 2023, Singapore, The Bank for International Settlements (BIS) and its central bank partners officially introduced Project Mandala. This project is designed to investigate the practicability of encoding jurisdiction-specific policy and regulatory prerequisites into a unified protocol, particularly for cross-border applications like foreign direct investment, borrowing, and payments.
  2. Divergent policy and regulatory frameworks across various jurisdictions represent significant challenges to achieving seamless and efficient cross-border payments. These disparities add to the regulatory compliance complexities throughout the payment process, extend the duration of cross-border transactions, and introduce uncertainties among stakeholders.
  3. Project Mandala, a proof-of-concept initiative jointly led by BISIH Singapore Centre, RBA, BOK, BNM, and MAS in collaboration with financial institutions, aims to alleviate the challenges posed by policy and regulatory compliance. This is achieved through the automation of compliance procedures, real-time transaction monitoring, and enhanced transparency and visibility regarding country-specific policies.
  4. In pursuit of this goal, it seeks to tackle the primary challenges identified during Project Dunbar, which was responsible for the development of an experimental platform for multiple central bank digital currencies (mCBDCs).
  5. The envisioned compliance-by-design architecture has the potential to facilitate more efficient cross-border transfers of various digital assets, including Central Bank Digital Currencies (CBDCs) and tokenized deposits. Additionally, it may serve as the fundamental compliance framework for both established and emerging wholesale or retail payment systems.
  6. These measures may encompass quantifiable and customizable foreign exchange regulations, as well as anti-money laundering and counter-terrorism financing (AML/CFT) measures.
  7. Project Mandala is in line with the Financial Stability Board’s 2023 priority actions aimed at achieving the G20 targets for improving cross-border payments. Specifically, it focuses on promoting an efficient legal, regulatory, and supervisory framework for cross-border payments while upholding their safety, security, and integrity.

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