Central Bank of UAE issued a communiqué on its joint “mBridge” project with partners from 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 communiqué outlines the latest progress of the mBridge project, which seeks 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 mBridge 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 AED1 billion) to be tested on the mBridge Trial 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. International trade settlement was prioritised in the identified business test cases given the high volume of trade between the four jurisdictions, amounting to US$731 billion.
“I extend my thanks to our participating UAE banks for their contribution and provision of business test cases, which were instrumental to the robust progress towards the project’s objectives.” Since February 2021, the CBUAE has worked with its global central banking partners on the mBridge project to deliver a proof-of-concept product on the use of CBDCs for international fund transfers based on distributed ledger technology also known as blockchain.
The project aims to create more efficient and innovative CBDC infrastructure to reduce obstacles to cross-border payments, including high costs, lack of transparency, low efficiency and other operational complexities. The CBUAE had previously conducted a similar CBDC experiment with its Saudi Arabian partner (SAMA), named Project Aber.