Multiple CBDC (mCBDC) Bridge

Payments, foreign exchange transactions and other operations usually travel across the world within the networks of large global banks, which serve as bridges between jurisdictions, a system generically known as correspondent banking. While serving a critical economic role, these networks and arrangements can be complex, sometimes fragmented, and involve operational inefficiencies

According to the BIS's most recent Annual Economic Report, multiple CBDC systems that join up national digital currencies in common interoperable platforms offer the greatest potential for improving today's systems' limitations. They provide central banks with a "clean slate" start, not burdened by legacy arrangements or technologies.

The BIS Innovation Hub Hong Kong Centre, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China and the Central Bank of the United Arab Emirates, are working together to build such prototype platform, called "mBridge".

The Phase 2 prototype demonstrated the potential of using digital currencies and distributed ledger technology for delivering real-time, cheaper and safer cross-border payments and settlements. The platform was able to complete international transfers and foreign exchange operations in seconds, as opposed to the several days normally required for any transaction to be completed using the existing network of commercial banks and operate in a 24/7 basis. The cost of such operations to users can also be reduced by up to half.

8 Apr 2021

The  Multiple CBDC (mCBDC) Bridge is a wholesale central bank digital currency (CBDC) co-creation project that explores the capabilities of distributed ledger technology (DLT) and studies the application of CBDC in enhancing financial infrastructure to support multi-currency cross-border payments.

The current phase of the project broadens the geographic and diversity of currencies and use cases, adding the Digital Currency Institute's experience with rolling out the e-CNY pilot in China, and the learnings by the Central Bank of the United Arab Emirates from developing a single-currency blockchain solution with Saudi Arabia (Project Aber).

Going forward, the project will continue to explore existing limitations of the current platform, related to privacy controls, liquidity management and the scalability and performance of DLT in handling large transaction volumes. In addition, the project pipeline will incorporate policy requirements and measures to ensure compliance with jurisdiction-specific regulations, along with testing and investigating appropriate governance models. The project's next phases are expected to include trials in a safe/controlled environment with commercial banks and other market participants.