Central Banks Of China, UAE Join CBDC Cross-Border Initiative

The People’s Bank of China and the Central Bank of the United Arab Emirates are now joining the second phase of the initiative formerly known as Project Inthanon-LionRock, which is working on a central bank digital currency (CBDC) for cross-border payments, a press release says.

The project was initiated by the Hong Kong Monetary Authority, along with the Bank of Thailand (BOT), the release says.

The project is “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,” the release says.

Per the release, the project will now continue to explore the capabilities for distributed ledger technology (DLT). The plan will help to develop a proof-of-concept prototype to help along real-time cross-border payment-versus-payment transactions in a multi-jurisdictional context any time and any day. Business use cases will also be explored.

Now that the UAE and China have joined the project, the project will “further foster a conducive environment” for other central banks to join.

The eventual outcome is supposed to help do away with pain points for things like cross-border transfers, helping with problems like high costs, inefficiencies and complex regulations.

In addition, the project will assess how the results come out and how it could work in practice for things such as cross-border fund transfers, international trade settlement and capital market transactions.

CBDCs are much discussed these days as several governments are at least looking into the prospect of how to introduce one. The Federal Reserve in the U.S. is working alongside seven other central banks as well as the Bank for International Settlements (BIS) on possible pathways for such a currency.

Beyond that is the idea of a “general purpose” CDBC which would go beyond use cases, exchanges and piecemeal cases where a fiat on one side would translate to a digital form and then be reconfigured to fiat on the other.