Digital currency payments network backed by China, UAE, Thailand & Hong Kong enters third phase of development

A multi-Central Bank Digital Currency platform for international payments has been developed in a joint project involving The Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, the Central Bank of the United Arab Emirates, and the Hong Kong Monetary Authority.

The digital currency payments prototype, code-named Project Inthanon-LionRock to mBridge, has demonstrated substantial increases in transaction speeds – from multiple days to near real-time.

It has also shown potential to reduce several core banking costs by up to 50%, including nostro-vostro liquidity, treasury operations, compliance and FX, according to a report on the project.

“The prototype replaces the chain of intermediary banks… by linking payers and payees. Using this connectivity model, the solution synchronises transaction data across all counterparties and pushes repetitive back-office operations that are often duplicated by each party along the correspondent banking chain into an automated smart contract layer,” the report states.

“These smart contracts can be applied to each process of the transaction lifecycle and automate routine treasury operations, reconciliations and confirmations, compliance validations, and settlement posting. The prototype reduces transaction times from an average of 3-5 days to near real-time cross-border payment.”

Deputy Chief Executive of the Hong Kong Monetary Authority, Howard Lee, said he’s confident that cross-border Central Bank digital currency payments will make global financial systems more efficient in the years to come.

“The mBridge project builds on our existing strengths and network in the global financial system, and helps keep Hong Kong in the forefront as digitalisation continues to make strides in the years to come,” said Mr Lee.

“The Hong Kong Monetary Authority would continue to collaborate closely with the BISI Innovation Hub and peer central banks to broaden and deepen the research, which could also contribute to the global exploration for using Central Bank Digital Currencies to expedite cross-border payments.”

The project will now move into Phase 3 three trials, which involves further experimentation with design choices and technology trade-offs and the development of a roadmap from prototype to a production-ready network.

Asia Markets recently reported on the development of a Singaporean Central Bank digital currency solution.

While earlier this year, U.S. Federal Reserve Chairman Jerome Powell admitted Washington is closely evaluating the roll out of China’s new Central Bank-controlled digital currency and revealed the U.S is doing substantial research on the development of its own digital currency.