A Chinese official has unveiled the details of their CBDC blockchain system designed for the Currency Bridge. This system allows for atomic and cross-border payments with simultaneous settlement of foreign exchange transactions.
This revelation took place during a significant session at the FinTech Symposium within Hong Kong’s Science and Technology Week.
During this event, Mu Changchun, the head of the Digital Currency Institute at the People’s Bank of China, offered comprehensive insights into the technical and privacy aspects of their central bank digital currency (CBDC) project. This project is commonly referred to as the ‘Money Bridge.’
Advancing CBDC Blockchain and Cross-Border Collaboration with ‘Money Bridge
The ‘Money Bridge’ project is poised to leverage a bespoke blockchain system crafted exclusively for this initiative, referred to as the mBridge Ledger (mBL). In this capacity, the ledger will play a pivotal role in offering essential services.
These services include concurrent foreign exchange and payment settlements, alongside the management of digital wallets and the assurance of user privacy and security.
The successful pilot phase for the mBridge project began with a collaborative effort in February 2021. In this endeavor, the Digital Currency Institute partnered with several central banks, such as the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the United Arab Emirates.
Together, they embarked on a mission to explore and evaluate the use of CBDCs within cross-border payment systems. Their efforts were guided by the Innovation Hub.
Groundbreaking Success: ‘Money Bridge’ CBDC Pilot and Transparency Initiatives
Between August and September 2022, an impressive pilot test was conducted. During this time frame, eight commercial banks from the participating countries executed real-world transactions using the Money Bridge platform. Notably, this pilot initiative encompassed nine cross-border payment and foreign exchange transactions, totaling more than one million yuan.
Furthermore, digital yuan transactions constituted 5.46% of the overall activity. These transactions primarily occurred in scenarios, such as cross-border commerce and interbank transactions.
Mu Changchun stressed the transparency of the mBridge framework. He pointed out that its source code is entirely accessible for inspection, verification, and audit by all participating central banks and monetary authorities.
These advanced technical and privacy measures play a crucial role. These measures are pivotal in fulfilling the Money Bridge project’s mission.
Their role is to establish a new benchmark for secure and efficient digital currency transactions across international borders. This, in turn, demonstrates the potential and future importance of CBDCs in the global financial landscape.