CBUAE and central bank issued a communique on mBridge project

By Leandra Monteiro

The Central Bank of the UAE (CBUAE) has 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 AED 1 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 USD 731 billion.

His Excellency Khaled Mohamed Balama, Governor of the CBUAE, commented: “The mBridge project is a landmark development in the field of central bank digital currencies, and one that we at the CBUAE are determined to jointly explore and develop with BIS and other central banking partners, as we look to deliver better, faster, safer and more cost-effective means of international fund transfers. This communique outlines the ambitious roadmap which the CBUAE and its fellow central banking partners have set out for the mBridge Trial Platform journey, underpinned by an iterative development approach. 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. 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.