The BIS, in collaboration with a range of central banks is delving into the feasibility of integrating regulatory prerequisites directly into cross-border transactions.
One of the primary roadblocks for efficient international payments stems from the differences in policy and regulatory structures across borders. These disparities escalate the compliance challenges throughout the payment process, elongate transaction durations, and create ambiguities for those involved.
The initiative, christened as “Project Mandala”, aspires to alleviate the complications arising from policy and regulatory compliance. By embracing automation, the project proposes to streamline compliance methodologies, supervise transactions in real-time, and enhance clarity and awareness regarding country-centric policies.
This initiative emerges on the heels of Project Dunbar, another ambitious undertaking spearheaded by BIS, which focused on the creation of an exploratory multi-central bank digital currency (mCBDC) platform.
BIS contends that the envisaged compliance-by-design blueprint could potentiate smoother international transfers of assorted digital assets, encompassing CBDCs and tokenised deposits. Beyond that, this innovative framework might potentially serve as the foundational compliance stratum for both established and budding payment systems, be it wholesale or retail.
To fortify the efficiency and reliability of the system, several measures are currently under scrutiny. These comprise determinable and adaptable foreign exchange regulations and vital measures targeting anti-money laundering (AML) and counteracting the funding of terrorism (CFT).
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