BIS concludes CBDC pilot with cross-border payments totalling $22M transacted BIS concludes CBDC pilot with cross-border payments totalling $22M transacted
The Bank for International Settlements (BIS) advisor announced the successful completion of a CBDC project involving multiple Asian central banks and a detailed report to follow this October.
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Updated: Sep. 28, 2022 at 2:05 pm UTC
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A pilot project involving four Asian central bank digital currencies (CBDC) involving real-value transactions was completed on Sept. 23, according to a LinkedIn post by Bank for International Settlements (BIS) advisor Daniel Eidan.
The pilot project, titled mBridge project (also known as Multiple CBDC or mCBDC), facilitated $22 million worth of real-value cross-border transactions between the Hong Kong Monetary Authority (HKMA) and the central banks of Thailand, China, the United Arab Emirates, the BIS, along with 20 commercial banks from those regions.
The mBridge project marks the third and final phase of BIS’ CBDC trial
The mBridge is part of the Inthanon-LionRock Phase 2. project, which also experiments with appropriate governance models with jurisdiction-specific regulations. In addition, it sought to design a novel cross-border payment system that resolves the current pain points of banks, including high cost, low speed, and operational complexities.
The mBridge project was initially launched in Sept. 2019 between HKMA, the Bank of Thailand (BoT), and BIS. The first phase was completed in January 2020, which achieved peer-to-peer fund transfers and foreign exchange transactions.
The second phase of the project was completed in Sept.2021. It explored distributed ledger (DLT)technology to facilitate real-time cross-border payments between the two jurisdictions.
The completion of Phase 2 recorded the support of more currencies and interfaces with multi-jurisdictional payment systems. These were accomplished on top of the cross-border corridor network prototype built in the previous phase.
Phase 2 also enabled multiple central banks to explore a DLT cross-border payment system through which they can issue their own CBDC and distribute it. Participants could conduct peer-to-peer payments and claim the CBDC for reserves at the issuing central bank.
Meanwhile, it enabled international transfers and foreign exchange operations in a matter of seconds compared to the average time of several days on the existing network of commercial banks, which is in operation 24/7. The DLT process can reduce the cost of cross-border payments by half, according to a BIS report published in Sept. 2021.
The BIS added it would publish a detailed report on the project in October 2022. According to Eidan, the information will document the results of Phase 3, its design choices, technology trade-offs, and a future roadmap from phase 1’s prototype to an open-source, production-ready system.
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Cynthia Chung
Cynthia is an avid writer who is fascinated by the potential of blockchain tech. She also resonates with Web3 values, especially creative expression and individual autonomy. Since discovering crypto in 2019, she has dedicated her work towards reporting on developments in the blockchain and crypto space.
