The Central Bank of the United Arab Emirates (UAE) made history on January 29 by successfully conducting the first cross-border digital dirham transfer through the mBridge central bank digital currency (CBDC) platform.
In a significant transaction, 50 million dirhams, equivalent to approximately $13.6 million, were seamlessly transferred to China via the multi-CBDC mBridge platform. Sheikh Mansour, Chairman of the Board of Directors of the Central Bank of the UAE, presided over this important CBDC transfer to coincide with the central bank’s founding ceremony.
A groundbreaking initiative, Project mBridge was unveiled in 2021 through a joint effort between the central monetary authorities of China, Hong Kong, Thailand and the UAE, in collaboration with the Bank for International Settlements (BIS). What sets this project apart is its multinational nature, with China as an integral participant. The mBridge platform was officially launched for commercialization in September 2023 after successfully completing a pilot phase in September 2022.
A key strength of the mBridge platform is its ability to onboard multiple commercial banks in each participating member state, fostering collaborative infrastructure and technology development. Operating on the mBridge ledger platform, real-time peer-to-peer transactions are enabled through the HotStuff+ consensus mechanism. This innovative CBDC platform is designed to enable faster transfers of each participating country’s national digital currency.
The development of mBridge is receiving praise and attention from an international perspective. Representative Maxine Waters, a member of the U.S. House of Representatives’ Financial Services Committee, expressed concern about the potential misuse of the project to avoid economic penalties.
The emergence of blockchain technology and the adoption of digital currencies on distributed ledgers has led governments around the world to explore the development of national digital currencies issued by central banks. A report from the Bank for International Settlements (BIS) found that nearly 90% of central banks around the world are actively considering central bank digital currencies (CBDCs). According to the Atlantic Council’s CBDC tracker, 11 of those countries have already launched CBDCs, 15 are in the pilot phase, and 26 are in the development phase.
The successful cross-border digital dirham transfer using the mBridge CBDC platform highlights the UAE’s commitment to ushering in a new era of global commerce enabled by digital currencies by embracing cutting-edge financial technologies and facilitating efficient cross-border transactions.