Top officials discuss and evaluate various options to expand the utilisation of mBridge, a multi-country central bank digital currency project involving Hong Kong, Thailand, mainland China and the UAE at Hong Kong FinTech Week 2021.
At Hong Kong FinTech Week 2021, MBridge, a multi-country central bank digital currency project involving Hong Kong, Thailand, mainland China and the UAE, announced they are currently in discussions to expand its use. The project’s developers hope to incorporate capital market transactions, which can cut the settlement time for securities traded between them to a matter of seconds.
Top central bank officials from participating states say that the digital currency platform currently involves 22 private sector participants and is being expected to expand its use to 15. These potential applications not only include capital market transactions, but also cross-border fund transfers linked to insurance transactions, e-commerce and wealth management products.
The fundamental aim of the project was to create a common platform that could cut settlement time and costs associated with cross-border transactions. The blockchain technology has shown the potential of facilitating real-time settlement by reducing the layers of middlemen.
The initiative also attempts to solve another problem of the traditional correspondent bank arrangement, where processing fees for cross-border fund transfer can reach up to 7% of the transaction’s value on average, whereas mBridge can cut the cost by half.
“Now that the right climate is in place for global payments, we need to invest fast and we need to make sure we are doing it right,” said Colin Pou, Executive Director (Financial Infrastructure) of the Hong Kong Monetary Authority (HKMA), while discussing the capability of the mBridge being able to tackle issues that could not be handled in the past.
Additionally, according to Mu Changchun, director general of the People’s Bank of China’s (PBOC) digital currency institute, The digital currency platform will also set its priority on protecting user privacy.
Given the strong flow of trade between China, Hong Kong, Thailand and the UAE, which amounted to US$780 billion last year, the participating states seem to recognise the necessity and relevance in mBridge.