BIS releases full report on mBridge wholesale CBDC platform after successful pilot
The Bank for International Settlements (BIS) has released the full details of its mBridge pilot project to use central bank digital currencies (CBDCs) for foreign exchange. Commercial banks in four jurisdictions made cross-border transfers using CBDCs and distributed ledger (blockchain) technology in the project, which was heralded as a success.
Twenty commercial banks in Hong Kong, China, the United Arab Emirates and Thailand used the custom-made mBridge Ledger platform and CBDCs issued by their respective central banks to conduct payment and foreign exchange payment-versus-payment transactions on behalf of their corporate clients between August 15 and September 23. Over $12 million was issued on the platform, facilitating over 160 transactions worth more than $22 million in value.
The mBridge Ledger platform used single-platform, direct-access infrastructure to make real-time, peer-to-peer transactions with the HotStuff+ consensus mechanism. The Dashing dynamic-threshold consensus protocol is also being tested.
The project brought to light a number of policy challenges. According to the authors, the legal categorization of a CBDC is the most pressing issue. They wrote:
The new technology raised even more fundamental issues than that:
Practical matters that will be addressed in 2023 and 2024 include integrating liquidity management and FX price discovery.
Related: CBDCs can cut cross border remittance costs by half: BIS report
The BIS Innovation Hub Hong Kong Centre has produced a series of papers in recent days. The BIS center, along with the Hong Kong Monetary Authority (HKMA) and United Nations Climate Change Global Innovation Hub released the results their Genesis 2.0 project to create tokenized green bonds on Oct. 24.
Read more on cointelegraph.com
