Project mBridge: Linking countries through CBDC

The payment system that makes it possible for money to move across borders has not kept up with the fast growth of global economic integration. The global network of correspondent banks that makes it easier to send money across borders is slowed down by high costs, slow speed, a lack of openness, and complicated operations. Banks are also cutting back on their correspondent networks and services, which means that many participants, especially emerging markets and developing economies, won't have enough access to the global financial system or won't be able to pay for it.

Multiple CBDC (multi-CBDC) arrangements that directly connect jurisdictional digital currencies in a single common technical infrastructure have a lot of potential to improve the current system and make cross-border payments instant, cheap, and available to everyone with the secure settlement.

The Central Bank of the United Arab Emirates, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China, and the BIS Innovation Hub Hong Kong Centre are all working together to develop the mBridge platform.

Central banks built the mBridge Ledger, a platform based on a new blockchain, to allow CBDCs to be used for real-time, peer-to-peer, cross-border payments, and foreign exchange operations. It also makes sure that policy and law requirements, rules, and governance needs for each jurisdiction are met. On the platform, central banks, some commercial banks, and their customers in four different countries took part in a pilot that involved real business transactions centred on foreign trade.

mBridge shows that it is possible to work toward a custom multi-CBDC platform solution to work around the problems with cross-border payment systems right now. Using what was learned from earlier project phases and the pilot, the project will keep building and testing the technology while adding more liquidity, compliance, and connection features to get the platform closer to being ready for production. In the next stages of the project, there will likely be more use cases and participants, as well as more work on the legal and governance systems.