The central bank of the United Arab Emirates (UAE) has etched its name in history by successfully conducting the inaugural cross-border digital dirham transfer via the mBridge central bank digital currency (CBDC) platform on January 29.
In a momentous transaction, 50 million dirhams, equivalent to approximately $13.6 million, were seamlessly transferred to China through the multi-CBDC mBridge platform. Sheikh Mansour, the chairman of the board of the Central Bank of the UAE, presided over this significant CBDC transfer, coinciding with the golden jubilee celebration of the central bank's establishment.
Project mBridge, a groundbreaking initiative, was unveiled in 2021 through a collaborative effort between the central monetary authorities of China, Hong Kong, Thailand, and the UAE, in partnership with the Bank for International Settlements (BIS). What sets this project apart is its multinational nature, with China being an integral participant. After successfully completing its pilot phase in September 2022, the mBridge platform was officially launched for commercial use in September 2023.
The mBridge platform's key strength lies in its ability to onboard multiple commercial banks from each participating member nation, fostering collaborative infrastructure and technology development. Operating on the mBridge ledger platform, real-time, peer-to-peer transactions are made possible through the HotStuff+ consensus mechanism. This innovative CBDC platform is designed for swifter transfers of each participant country's national digital currency.
While mBridge's advancements are lauded, it has also drawn attention from international quarters. Representative Maxine Waters, a member of the House Financial Services Committee in the United States Congress, has expressed concerns about the potential misuse of the project to evade economic penalties.
The emergence of blockchain technology and the adoption of digital currencies on distributed ledgers have prompted governments worldwide to explore the development of national digital currencies issued by central banks. A report by the Bank for International Settlements (BIS) reveals that nearly 90% of central banks globally are actively considering central bank digital currencies (CBDCs). Among them, 11 countries have already launched their CBDCs, 15 are in the pilot phase, and 26 are in the development stage, as per the CBDC tracker by the Atlantic Council.
The successful cross-border digital dirham transfer using the mBridge CBDC platform highlights the UAE's commitment to embracing cutting-edge financial technologies and facilitating efficient cross-border transactions, ushering in a new era of digital currency-enabled global commerce.