The payment system underpinning cross-border financial flows has not kept pace with rapid growth in global economic integration.
The global
network of correspondent banks that facilitates international payments
is hindered by high costs, low speed and transparency, and operational
complexities. Banks are also paring back their correspondent networks
and services, leaving many participants (notably emerging market and
developing economies) without sufficient or affordable access to the
global financial system.
Multiple CBDC (multi-CBDC) arrangements that directly connect
jurisdictional digital currencies in a single common technical
infrastructure offer significant potential to improve the current system
and allow cross-border payments to be immediate, cheap and universally
accessible with secure settlement.
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
are working together to build such a multi-CBDC platform, known as
mBridge.
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 using CBDCs. It also ensures
compliance with jurisdiction-specific policy and legal requirements,
regulations and governance needs. A pilot involving real corporate
transactions centred around international trade was conducted on the
platform among participating central banks, selected commercial banks
and their customers in four jurisdictions.
mBridge demonstrates that it is realistic to aim for a tailored
multi-CBDC platform solution to tackle the limitations of today's
cross-border payment systems. Learning from earlier project phases and
the pilot, the project will continue building the technology and testing
it, while adding more liquidity, compliance and connectivity features,
with a view to moving the platform closer to a production-ready system.
The project's next phases are also expected to include additional use
cases and participants, and further work on the legal and governance
framework.
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