BIS releases full report on mBridge wholesale CBDC platform after successful pilot

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The Bank for International Settlements (BIS) has released full details of its mBridge pilot project to use Central Bank Digital Currencies (CBDCs) for currencies. Commercial banks in four jurisdictions made cross-border transfers using CBDCs and distributed ledger technology (blockchain) under the project, which was hailed as a success.

Twenty commercial banks in Hong Kong, China, the United Arab Emirates and Thailand have used the bespoke mBridge Ledger platform and CBDCs issued by their respective central banks to conduct payment and PvP foreign exchange transactions on behalf of their clients. client companies between August 15 and September 23. Over $12 million has been issued on the platform, facilitating over 160 transactions worth over $22 million.

The mBridge Ledger platform used a single-platform direct access infrastructure to perform real-time peer-to-peer transactions with the HotStuff+ consensus mechanism. The Dashing dynamic threshold consensus protocol is also tested.

The project highlighted a number of policy challenges. According to the authors, the legal categorization of a CBDC is the most pressing issue. They wrote:

“The typical question is whether the CBDC on the platform would be classified as a currency, a representation of funds on account with the central bank, a debt, or something else.”

The new technology has raised even more fundamental questions than this:

“Extending access to central bank money directly to foreign participants and transacting on a shared ledger requires further exploration of policy, data privacy, and governance considerations.”

Practical issues that will be addressed in 2023 and 2024 include the integration of liquidity management and currency price discovery.

Related: CBDCs can cut cross-border remittance costs in half: BIS report

The BIS Innovation Hub Hong Kong Center has produced a series of articles in recent days. The BIS center, along with the Hong Kong Monetary Authority (HKMA) and the United Nations Global Climate Change Innovation Center released the results of their Genesis 2.0 project to create token green bonds on October 24. BIS and HKMA have studied retail and wholesale CBDCs. separately. They released the latest report on their Project Aurum Retail CBDC project on October 21.

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