BIS Project mBridge Hits Viable Status

Following a successful pilot in late 2022, Project mBridge, a central bank digital currency (CBDC) platform created by the BIS Innovation Hub, the Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Institute of the People’s Bank of China and the Hong Kong Monetary Authority, has reached minimum viable product (MVP) stage.

The project aims to explore a multi-CBDC platform shared among participating central banks and commercial banks, built on distributed ledger technology (DLT) to enable instant cross-border payments and settlement. The Saudi central bank is joining the project as a full participant and the BIS is inviting private sector participants to propose “value-added solutions” that can be connected to the platform.

The project, which has 26 observing members, aims to tackle some of the key inefficiencies in cross-border payments, including high costs, low speed and operational complexities. It also addresses financial inclusion concerns, the BIS says, particularly in jurisdictions where correspondent banking (which connects countries to the global financial system) has been in retreat, causing additional costs and delays. “Multi-CBDC arrangements that connect different jurisdictions in a single common technical infrastructure offer significant potential to improve the current system and allow cross-border payments to be immediate, cheap and universally accessible with final settlement,” it adds.

A platform based on a new blockchain – the mBridge Ledger – was built to support real-time, peer-to-peer, cross-border payments and FX transactions. Since the 2022 pilot, the mBridge project team has been exploring whether the prototype platform could evolve to become an MVP – a stage now reached.

To achieve this, the four founding participants have each deployed a validating node, while commercial banks have conducted more real-value transactions in preparation for the MVP release. In tandem, the BIS says the project steering committee has created a bespoke governance and legal framework, including a rulebook, tailored to match the platform’s unique decentralised nature.

“The MVP platform is enabled to undertake real-value transactions (subject to jurisdictional preparedness) and is also compatible with the Ethereum Virtual Machine,” the BIS says. “This allows it to be a testbed for add-on technology solutions, new use cases and interoperability with other platforms.”