Dubai: The Central Bank of UAE (CBUAE) will join a multi-currency central bank digital currency project for cross-border payments initiated by Hong Kong Monetary Authority (HKMA), the Bank of Thailand and People’s Bank of China (PBC).
The CBUAE along with the Digital Currency Initiative (DCI) of PBC is now part of the second phase of the Project Inthanon-LionRock1, initiated by the HKMA and the BOT. This effort is strongly supported by the Bank for International Settlements Innovation Hub Centre in Hong Kong and has been renamed ‘Multiple Central Bank Digital Currency (m-CBDC) Bridge project’.
Building on the experience learnt from Project Inthanon-LionRock, the m-CBDC Bridge project will further explore capabilities of distributed ledger technology (DLT) or blockchain.
Real-time forex payments
By developing a proof-of-concept (PoC) prototype, the project aims to facilitate real-time cross-border foreign exchange payment-versus-payment transactions on a 24/7 basis. It will also explore business use cases in a cross-border context, using domestic and foreign currencies.
Following the joining of CBUAE and the PBC DCI, the project will foster an environment for more central banks in Asia as well as other regions to jointly study the potential of blockchain technology in enhancing the financial infrastructure for cross-border payments.
Eventually, the outcome is expected to alleviate the pain points in cross-border fund transfers, such as inefficiencies, high cost and complex regulatory compliance. Most importantly, participating central banks will take into account the results of the PoC work to evaluate the feasibility for cross-border fund transfers, international trade settlement and capital market transactions.