Several major banks in Asia have joined forces to build a central bank cross-border digital currency, according to a joint announcement released on February 23.
Dubbed the Multiple Central Bank Digital Currency Bridge – or m-CBDC – the project sees the Hong Kong Monetary Authority, the Bank of Thailand, the Central Bank of the United Arab Emirates and the Digital Currency Institute of the People’s Bank of China combine to create a prototype CBDC using distributed ledger technology.
Building on the ‘Inthanon-LionRock’ research project launched in 2019, the latest phase of CBDC exploration will develop a proof of concept to ‘facilitate real-time cross-border currency payment-to-payment transactions in a -Judicial context and on a 24/7 basis ”, specifies the announcement.
The stated objective of the project is to address “weak points” when carrying out cross-border transfers. These include cost inefficiencies and the complex regulations that come with transferring money from one country to another.
As previously described by the Deputy Governor of the Bank of Thailand, Mathee Supapongse:
“The model offers a network of cross-border corridors where participants can transfer funds instantly on a peer-to-peer basis and in an atomic PvP fashion. The design and main findings of the project added new dimensions to the studies of central bank communities in the area of cross-border remittances. “
Central banks participating in the project hope to attract more institutions to the program and aim to create a more conducive environment for CBDC exploration in Asia and beyond.
The rapid emergence of cryptocurrencies in recent years has forced many governments and central banks to create a digital alternative to decentralized coins like Bitcoin (BTC), Ether (ETH), and many more.
The inability of governments to control or track the flow of cryptocurrencies will undoubtedly see CBDCs become commonplace in the years to come. China is ahead of the curve in establishing CBDCs and is already testing biometric ID hardware wallets for its digital yuan.