CBUAE Unveils MBridge Platform For Efficient Cross-Border Digital Currency Payments

The Central Bank of the UAE (CBUAE), in collaboration with the Bank for International Settlements Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority, the Bank of Thailand, and the Digital Currency Institute of the People’s Bank of China, has launched the Minimum Viable Product (MVP) platform of the mBridge project. This initiative represents a multi-central bank digital currency (CBDC) common platform designed for wholesale cross-border payments and settlement.

This marks the first multi-CBDC platform to reach the MVP phase, making it ready for use by early adopters. In January 2024, His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court and Chairman of the Board of the CBUAE, initiated the first cross-border payment of 'Digital Dirham', the CBUAE’s CBDC, to China. The transaction was valued at AED50 million and represented the first real-value cross-border CBDC payment between a MENA country and a country outside the region on an MVP-ready platform.

To date, several UAE licensed financial institutions (LFIs) have been onboarded onto the mBridge platform. These LFIs are now prepared to initiate and process cross-border CBDC payments with their counterparts in participating jurisdictions. The CBUAE anticipates increased use of the mBridge platform for cross-border payments among these jurisdictions. Ongoing reviews and enhancements are being conducted as the platform progresses towards a full production launch.

The mBridge platform is a key initiative under the CBUAE’s Financial Infrastructure Transformation (FIT) programme. This programme aims to accelerate the digital transformation of the UAE’s financial services sector. The deployment, testing, and launch of the mBridge MVP are part of Phase 1 implementation of CBUAE’s broader CBDC strategy, which is supported by the use of Digital Dirham.

Currently, CBUAE is planning for Phase 2 implementation. This phase includes domestic CBDC payments and further enhancements of cross-border fund transfers. Utilising distributed ledger technology, the mBridge project aims to connect economies through a multi-CBDC platform. This initiative seeks to support international trade and cooperation while overcoming challenges associated with existing cross-border payment systems. It offers efficient, low-cost, and instant cross-border payments settled in central bank money.

Strategic Objectives and Future Prospects

Khaled Mohamed Balama, Governor of the CBUAE, stated that participation in mBridge aligns with strategic objectives of promoting innovation, efficiency, and financial inclusion in the financial services sector. By collaborating with international partners, CBUAE aims to contribute to developing a more robust, efficient, economical, interconnected global payments infrastructure that benefits all participants while maintaining high security standards.

With inputs from WAM