The mBridge project is piloting a common multi-central bank digital currency (multi-CBDC) platform for wholesale cross-border payments. It aims to address some of the key inefficiencies of cross-border payments, such as high costs, low speed and transparency, and operational complexities. At the same time, the project aims to safeguard the monetary sovereignty and monetary and financial stability of each participating jurisdiction, guided by the principles of “do no harm”, compliance and interoperability. The mBridge Project platform leverages bespoke distributed ledger technology (DLT), a set of comprehensive legal rule documents and a tailored governance structure.
The project is a collaborative effort of the BIS Innovation Hub, four founding central banks and more than 25 observer members:
- Founding central banks: Hong Kong Monetary Authority, Central Bank of the United Arab Emirates, Digital Currency Institute of the People's Bank of China and Bank of Thailand.
- Observer members: Bangko Sentral of the Philippines; Bank Indonesia; Bank of France ; Bank of Israel; Bank of Italy; Bank of Korea; Bank of Namibia; Central Bank of Bahrain; Central Bank of Chile; Central Bank of Egypt; Central Bank of Jordan; Central Bank of Malaysia; Central Bank of Nepal; Central Bank of Norway; Central Bank of the Republic of Türkiye; European Central Bank ; International Monetary Fund; Magyar Nemzeti Bank; National Bank of Georgia; National Bank of Kazakhstan; New York Innovation Center, Federal Reserve Bank of New York; Reserve Bank of Australia; Saudi Central Bank; South African Reserve Bank; The World Bank.
Report – mBridge Project: Connecting Economies via CBDC (October 2022)
Joint report from the BIS Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China and the Central Bank of the United Arab Emirates.
The payment system that underpins cross-border financial flows has not kept pace with the rapid growth of global economic integration. Although essential to the functioning of the international payments system, the global network of correspondent banks that facilitates international payments is hampered by high costs, low speed and transparency, as well as operational complexities due to duplicated processes and steps in the payment chain. Banks are also reducing their networks and correspondent services, leaving many players (including emerging and developing market economies) without sufficient or affordable access to the global financial system.
Multi-CBDC agreements that directly connect CBDCs from different jurisdictions into a single common technical infrastructure offer significant potential to improve the current system and enable cross-border payments to be immediate, cheap and universally accessible with final settlement.
For the mBridge project, a platform based on a new blockchain – the mBridge Ledger – was built by central banks to support real-time, peer-to-peer cross-border payments and foreign exchange transactions. help of CBDCs, focusing on the use case of International Exchange. It also ensures compliance with policies and legal requirements, regulations and governance needs specific to each jurisdiction. In 2022, a pilot project involving real-world corporate transactions was conducted on the platform among participating central banks, selected commercial banks and their corporate clients in four jurisdictions.
A next step envisaged in this project is to see if the tested platform can evolve to become a minimum viable product, which involves continued work on technological and legal and governance frameworks; act as a test bed and assess potential synergies with other BIS Innovation Hub projects and innovative private sector solutions; and welcome new participants and use cases.