mBridge: a project to speed up cross-border transfers
mBridge: a project to speed up cross-border transfers
Blockchain

mBridge: a project to speed up cross-border transfers

By Stefania Stimolo - 28 Sep 2021

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A new digital currency project, called mBridge, involving multiple central banks and monetary authorities from Hong Kong, Thailand, China and the United Arab Emirates (UAE) is being tested to speed up and cut the cost of cross-border transfers.

It uses Ethereum’s Hyperledger Besu blockchain and aims to reduce the time of international transfers to seconds, compared to the days of waiting in the traditional correspondent banking system. 

mBridge and the cross-border transfers

Reportedly, the prototype is a test to evaluate the results of a Digital Currency or CBDC in terms of speed and cost compared to the traditional transactional transfers that exist. 

“A cross-border experiment of digital currency shows that e-cash can lead to faster and cheaper global money transfers”.

The experiment speaks of electronic cash or e-cash rather than a cryptocurrency and is already backed by the Bank for International Settlements and four central banks.

This does not rule out the possibility that the use of distributed blockchain technology could help cut cross-border transaction costs by up to half in this centralised context too.

Bénédicte Nolens, head of the Hong Kong centre of the BIS Innovation Hub said:

“Enabling faster and cheaper cross-border wholesale payments, including to jurisdictions that don’t benefit from a vibrant correspondent banking system, would be positive for trade and economic development”.

mBridge cross-border transfers
Honk Kong authorities have been involved in mBridge project

mBridge: multi Digital Currency (multi CBDC) platform 

The mBridge project was initiated by the Hong Kong Monetary Authority and the Bank of Thailand. Their joint research ended in 2020, after 10 banks from the two regions tested a settlement network model using distributed ledger technology.

mBridge involves the Bank for International Settlements Innovation Hub (BISIH), 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 Hong Kong Monetary Authority (HKMA). 

mBridge and the benefits on the multi CBDC

This is a true multi CBDC platform that aims to provide intermediate results to the single CBDC that would be issued by each individual Central Bank. 

According to one report, the improved prototype has the potential to offer benefits to participating central banks, including:

  • the ability to manage the liquidity of their CBDC on the prototype,
  • monitoring the flow and balances of their issued CBDC,
  • improving the level of transaction privacy; and
  • automate certain compliance functions.

The CBDC is a topic of global interest. In early August, the Bank of Jamaica (BoJ) officially announced that it had minted their central bank’s first batch of digital currency. 

In late August, Nigeria and Singapore also announced that they will be ready to launch their CBDC. 

 

Stefania Stimolo

Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.

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