The Central Bank of the UAE (CBUAE) has released an official statement on its joint “mBridge” project with the Bank for International Settlements (BIS), Innovation Hub Centre in Hong Kong, the Hong Kong Monetary Authority (HKMA), the Bank of Thailand (BoT), and the Digital Currency Institute of the People’s Bank of China (PBoC).
Entitled ‘Building a multi CBDC platform for international payments’, the statement outlines the latest progress of the mBridge project, which aims to speed up cross-border fund transfers and international trade settlement transfers between participating banks using central bank digital currencies (CBDC).
The project has now identified and will start to put through, business test cases based on historical transactions to test the recently-developed mBridge Trial Platform. In addition, a roadmap for the project’s target achievements in 2022 has been established, using an iterative and agile process to develop a minimally viable product that could support the full process of international trade settlement and other use cases.
Twenty-two project participants from all four jurisdictions identified fifteen possible business test cases to assess the mBridge Trial Platform’s ability to enhance real-world cross-border payments. The identified business test cases cover transactions across eleven industries, amounting to $27.2 billion, to be tested on the platform.
Five banks located in the UAE took part, including First Abu Dhabi Bank, Emirates NBD, Dubai Islamic Bank, HSBC, and Standard Chartered Bank, in some of these fifteen cases. Given the enormous volume of trade between the four jurisdictions, which totals $731 billion, international trade settlement was emphasized in the identified business test cases.
“The mBridge project is a landmark development in the field of central bank digital currencies, and one that we at the CBUAE are determined to jointly explore and develop with BIS and other central banking partners, as we look to deliver better, faster, safer and more cost-effective means of international fund transfers. This statement outlines the ambitious roadmap which the CBUAE and its fellow central banking partners have set out for the mBridge Trial Platform journey, underpinned by an iterative development approach.”
Since February 2021, the CBUAE has collaborated on the mBridge project with its international central banking partners to deliver a proof-of-concept solution based on distributed ledger technology (DLT), often known as the blockchain, for the use of CBDCs for international fund transfers.
The project intends to develop a more efficient and creative CBDC infrastructure in order to minimize cross-border payment barriers such as high costs, lack of transparency, inefficiency, and other operational issues. The CBUAE had previously conducted a similar CBDC experiment with its Saudi Arabian partner Saudi Central Bank (SAMA), named Project Aber.