Nearly a year after the successful completion of its pilot study, the cross-border central bank digital currency (CBDC) initiative known as Project mBridge is advancing toward the launch of its Minimum Viable Product (MVP), a pivotal step towards its full-scale implementation.
In a recent speech, Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), revealed that the mBridge project is set to onboard new participants in the coming days. Although Yue did not specify the identities of these new participants, industry analysts anticipate the inclusion of central banks from Southeast Asian nations.
Presently, mBridge boasts the participation of central banks from China, the United Arab Emirates (UAE), Hong Kong, and Thailand, with technical support provided by the Bank for International Settlements (BIS).
The project’s expansion to include more central banks aligns with the plan to introduce an MVP, a move expected to accelerate the adoption rates of the CBDC project. While Yue did not disclose the exact MVP launch date, his speech suggested that commercial banks may be granted participation in the cross-border initiative.
Insiders familiar with the matter have revealed that interested central banks will be welcome to join the platform regardless of whether they have launched their own CBDCs. It’s worth noting that none of the initial group of participating countries have fully rolled out a CBDC yet, as development efforts remain in the pilot stage.
Yue stated, “We are expecting to welcome more fellow central banks to join this open platform. And very soon we will launch what we call a minimum viable product, with the aim of paving the way for the gradual commercialization of mBridge.”
The BIS, keen to build upon the initial successes of the mBridge pilot project, is enthusiastic about the forthcoming MVP rollout. The month-long pilot conducted in 2022 demonstrated substantial promise in reducing the time and cost associated with cross-border payments, facilitating over $22 million worth of transactions among 20 participating banks.
A comprehensive report by the BIS delved into the technical, legal, and regulatory aspects of mBridge, pledging a “Lego bricks” approach to support participating commercial banks. Yue expressed optimism, stating, “Hopefully this new innovative platform will help resolve longstanding pain points in cross-border payments and enhance the efficiency of the global value chain.”
However, while mBridge continues to attract interest in Southeast Asia and the Middle East, it has raised concerns among U.S. officials. U.S. Representative Maxine Waters (D-CA) expressed skepticism about mBridge’s potential to enable participating countries to circumvent global sanctions, emphasizing the uncertainty surrounding the impact of CBDC introductions on the global financial landscape.
The BIS remains committed to exploring cross-border CBDCs through projects like Icebreaker, Jura, and Dunbar. To ensure consistent development, the BIS has collaborated with the G20 and extended technical assistance to countries interested in launching their own CBDCs.
