China and the United Arab Emirates have joined a research initiative that studies the feasibility of a central bank digital currency (CBDC). The two countries joined Hong Kong and Thailand which launched the project in 2020. It focuses on the application of a CBDC to ease costs and increase the efficiency of cross-border funds transfers.
The Hong Kong Monetary Authority and the Bank of Thailand signed an MOU to partner in CBDC research in May 2019. At the time, the two had been conducting separate research into the field. HKMA had its own Project LionRock while the BoT was studying CBDCs under Project Inthanon. They combined to form a joint study known as Project Inthanon-LionRock.
The Digital Currency Institute at the People’s Bank of China and the Central Bank of the UAE are now joining the initiative in its second phase. They have also renamed it to Multiple CBDC (m-CBDC) Bridge Project.
In a press release announcing the partnership, the four central banks pledged to move the CBDC research ahead.
“Building on the experience learnt from Project Inthanon-LionRock, the m-CBDC Bridge project will further explore the capabilities of distributed ledger technology (DLT), through developing a proof-of-concept (PoC) prototype, to facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context and on a 24/7 basis.”
The four banks believe they are setting the stage for other central banks in Asia to explore CBDCs and DLT. The goal is to eliminate the pain points that hinder cross-border transfers. These include high costs, inefficiencies and complex regulatory compliance.
The banks concluded, “Most importantly, the participating central banks will take into account the results of the PoC work to evaluate the feasibility of the m-CBDC Bridge project for cross-border fund transfers, international trade settlement and capital market transactions.”
Of the four, China’s PBoC is the leader in the CBDC field. The bank has been developing its digital yuan for over five years now. Multiple reports have indicated that the PBoC intends to launch the CBDC in time for the Beijing Winter Olympics next year. The PBoC has been conducting extensive pilots in major cities including Suzhou, Beijing and Shenzhen.
See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.