Tuesday, 25 June 2024

Project mBridge reaches minimum viable product stage and invites

5 min read

Project mBridge continues its development and has reached the minimum viable product (MVP) stage, while broadening its international reach.

The project aims to explore a multi-central bank digital currency (CBDC) platform shared among participating central banks and commercial banks, built on distributed ledger technology (DLT) to enable instant cross-border payments and settlement.

Project mBridge is the result of extensive collaboration starting in 2021 between the BIS Innovation Hub, Bank of Thailand, Central Bank of the United Arab Emirates, Digital Currency Institute of the People’s Bank of China and Hong Kong Monetary Authority. The Saudi Central Bank is joining mBridge as a full participant. There are also more than 26 observing members.

The project aims to tackle some of the key inefficiencies in cross-border payments, including high costs, low speed and operational complexities. It also addresses financial inclusion concerns, particularly in jurisdictions where correspondent banking, which connects countries to the global financial system has been in retreat, causing additional costs and delays. Multi-CBDC arrangements that connect different jurisdictions 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 final settlement.

A platform based on a new blockchain – the mBridge Ledger – was built to support real-time, peer-to-peer, cross-border payments and foreign exchange transactions. In 2022, a pilot with real-value transactions was conducted. Since then, the mBridge project team has been exploring whether the prototype platform could evolve to become an MVP – a stage now reached.

To achieve this, the four founding participant central banks and monetary authorities have each deployed a validating node, while commercial banks have conducted more real-value transactions in preparation for the MVP release. In tandem, the project steering committee has created a bespoke governance and legal framework, including a rulebook, tailored to match the platform’s unique decentralised nature.

The MVP platform is enabled to undertake real-value transactions and is also compatible with the Ethereum virtual machine. This allows it to be a testbed for add-on technology solutions, new use cases and interoperability with other platforms.

As it enters the MVP stage, Project mBridge is now inviting private sector firms to propose new solutions and use cases that help develop the platform and showcase all its potential.

Re-disseminated by The Asian Banker

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