China’s Central Banks, UAE Enter Joint Digital Currency Project for Cross-Border Payments

The Bank of Thailand (BOT), along with the Hong Kong Monetary Authority (HKMA), have announced a joint project with the People’s Bank of China (PBOC) and the Central Bank of the United Arab Emirates that will use blockchain technology to conduct cross-border payments.

Last year, the Hong Kong Monetary Authority and the Bank of Thailand teamed up together to explore the potential applications of central bank digital currencies (CBDC), and now they have expanded their project to also include the People’s Bank of China and the Central Bank of the United Arab Emirates. The group of central banks have been looking into distributed ledger technology (DLT) to help “facilitate real-time cross-border foreign exchange payment-versus-payment transactions,” revealed Hong Kong’s central bank.

Payment-versus-payment is a form of settlement used to ensure that final payment transfers in one currency takes place only when the finalized transfer of a payment in another currency also occurs. However, given that cross-border payments are typically costly and time-consuming, the central banks anticipate that the utilization of digital currencies will speed up the process.

The new digital currency project, called the m-CBDC Bridge, will first aim to develop a proof-of-concept prototype, which will be analyzed to determine if the initiative can be used for cross-border fund transfers, international trade settlement, and capital market transactions. The project is also expected to eventually expand to include more central banks.

Information for this briefing was found via the Bank for International Settlements. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.