The Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) announced in a joint statement that the central banks of China and the United Arab Emirates will be joining them for the second phase of their central bank digital currency (CBDC) project.
Previously known as Project Inthanon-LionRock, the project has been renamed as “m-CBDC Bridge” which will further explore the capabilities of distributed ledger technology (DLT), through developing a proof-of-concept (PoC) prototype, to facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context and on a 24/7 basis.
The m-CBDC Bridge project will also explore business use cases in a cross-border context using both domestic and foreign currencies.
Now with the participation of the Central Bank of the United Arab Emirates (CBUAE) and the Digital Currency Institute of the People’s Bank of China (PBC DCI), the m-CBDC Bridge project will further foster a conducive environment for more central banks in Asia as well as other regions to jointly study the potential of Distributed Ledger Technology (DLT) in enhancing the financial infrastructure for cross-border payments.
Eventually, the outcome is expected to alleviate the pain points in cross-border fund transfers, such as inefficiencies, high cost and complex regulatory compliance.
Most importantly, the participating central banks will take into account the results of the proof-of-concept (PoC) work to evaluate the feasibility of the m-CBDC Bridge project for cross-border fund transfers, international trade settlement and capital market transactions.
The CBDC project has the support of the Bank for International Settlements Innovation Hub Centre in Hong Kong.
The first phase of the CBDC project was completed in December 2019 where a DLT-based prototype was developed with 10 participating banks from both regions and key findings were published on HKMA and BOT websites.
Featured image: HKMA