Speaking at the FinTech Symposium held during Hong Kong’s Science and Technology Week, Mu Changchun, director of the Digital Currency Insititute under the People’s Bank of China (PBoC), gave an overview of its latest central bank digital currency (CBDC) infrastructure project, known as the ‘Money Bridge’.
Money Bridge also called the mBridge Ledger (mBL), is a purpose-built blockchain for CBDCs that will facilitate crucial services such as simultaneous foreign exchange and payment settlements, wallet administration, and privacy protection. The project seeks to address some key inefficiencies of cross-border payments, such as high costs, low transaction speeds, lack of transparency, and operational complexities.
Central Banks of China, UAE, Thailand, and Hong Kong Participate in mBridge Pilot
The project officially kicked off in February 2021, when the PBoC’s Digital Currency Initiative, which is responsible for developing the digital yuan (eCNY) CBDC, entered into a strategic partnership with multiple global central banks. The participating members included the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the United Arab Emirates.
The central banks joined forces under the guidance of the Bank of International Settlements Innovation Hub (BISIH), a policy group that seeks to improve the overall functioning of the global financial system, to test and explore the potential of CBDCs in cross-border payment systems.
The BIS promised that Project mBridge safeguards the currency sovereignty and monetary and financial stability of each participating country, and is guided by the organization’s “do not harm” compliance and interoperability principles.
Alongside the four founding members, mBirdge also has over 25 observing members, which include the Federal Reserve Bank of New York, the International Monetary Fund (IMF), the World Bank, the European Central Bank, the New York Innovation Centre, and the central banks of France, Israel, Saudi Arabia, South Korea, Australia, Jordan, Egypt, Nambia, Georgia, Kazakhstan, Turkiye, Nepal, Norway, Malaysia, Chile, and South Africa.
In 2022, the Money Bridge project marked a milestone after it successfully completed a pilot test involving eight commercial banks from China, Hong Kong, UAE, and Thailand, where they carried out real transactions on the blockchain. Between August and September of last year, the participating banks conducted nine cross-border payments and foreign exchange transactions on the platform that amounted to over a million yuan (approximately $136,677). Notably, more than 5% of the transactions were handled in the digital yuan, especially in scenarios involving interbank settlements and cross-border commerce transactions.
ALSO READ:- Is The Crypto Dream Over?: Venture Capital Funding Drops To Historic Lows
mBridge Aims To Establish a Secure and Efficient Platform For Cross-Border CBDC Transactions and Foreign Exchange
According to the BIS, a multi-CBDC arrangement that can connect the digital currencies of different countries on a “single common technical infrastructure” offers a “significant potential” for improving the existing international payment system and allowing for “immediate, cheap, and universally accessible” cross-border remittances.
The mBridge Ledger, developed by the four founding members of the project in association with the BIS, supports real-time, peer-to-peer, cross-border payments and foreign currency exchange transactions using CBDCs. The blockchain is said to be compliant with jurisdiction-specific policies, legal requirements, and regulations.
In the next stage of its development, the group of Central Bankers will see if the CBDC network can evolve to become a minimum viable product with multiple use cases. Money Bridge’s efficiency and synergies will be further evaluated by putting it up with other BIS Innovation Hub projects and solutions by private sector participants.
Speaking at the FinTech Symposium, Mu Changchun highlighted the transparency of the mBridge architecture, stressing that the protocol’s source code can be fully inspected, verified, and audited by participating central banks and monetary authorities at any time. He also added that the project aims to establish a new benchmark for secure and efficient cross-border digital currency transactions, further demonstrating the vital role CBDCs will play in the global financial system.
ALSO READ:- M3 Macs Put to the Test: GeekBench Scores Reveal Mind-Blowing Performance
