The Bank of International Settlements (BIS) has announced the completion of its central bank digital currency (CBDC) pilot with impressive figures. The pilot was a collaboration of the central banks of Hong Kong, Thailand, China, and the United Arab Emirates (UAE) to promote multi-currency cross-border payments.
Dubbed mBridge or mCBDC, the trial ran for a month and had participants explore the technology stack of the proposed CBDC and the legal issues that could arise from the complex undertaking.
Daniel Eldan, Advisor and Solution Architect at BIS Innovation Hub, noted in a LinkedIn post that over $12 million in value were issued on the platform while “over 160 cross-border payments and FX (foreign exchange) transactions totaling more than $22 million in value between 20 participating commercial banks.”
“Proud to have been a part of the working team in making this historic milestone!” wrote Tayo Tunyathon, Senior Specialist on CBDCs at the Bank of Thailand. “We are only just beginning to see the possibilities of CBDCs in bridging borders and facilitating trade/economic growth.”
Gleaning from the posts from Eldan and Tunyathon, a detailed report will be issued by BIS Innovation next month that will cover the technicalities of the mCBDC. A June report revealed that the mCBDC will be built using decentralized ledger technology and adopt a “lego bricks” approach that will help accommodate participating commercial banks.
This is not the first time the BIS conducted CBDC experiments, as it has carried out three previous ones, including Jura, Dunbar, and Inthanon-LionRock2 (ILR2), with a focus on cross-border and international payments.
CBDC strides in the participating countries
The four participating countries have all been receptive to developing digital versions of their local currencies. The Hong Kong Monetary Authority (HKMA) noted that although it had concluded initial rounds of consultations, it will take around two or three years to launch its CBDC, given the legal and regulatory hurdles it must face.
For Thailand, a pilot study has been organized with Vachira Arromdee, deputy governor of the Bank of Thailand, noting that retail CBDCs are the “foundation of the future financial system. The UAE had previously unveiled a roadmap for its own development, while China’s digital yuan is nearing full launch after processing over $12 billion in transactions.
Despite the multiple tests, regulators are aware of the potential pitfalls associated with CBDC development, including concerns about privacy, security, and energy efficiency.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: The BSV Global Blockchain Convention presentation, CBDCs and BSV
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