The Central Bank of the United Arab Emirates (UAE) successfully executed its inaugural cross-border transaction using the digital dirham. This transfer, amounting to 50 million AED ($13.6 million), was conducted on January 29 using the mBridge central bank digital currency (CBDC) platform, with the transaction directed to China, as reported by Gulf News.
Sheikh Mansour, the Chairman of the Board of the Central Bank of the UAE, performed this landmark CBDC transfer during the golden jubilee celebration of the central bank’s establishment.
Launched in 2021, Project mBridge is a collaborative effort among the central monetary authorities of China, Hong Kong, Thailand, and the UAE, in partnership with the Bank of International Settlement (BIS). This project is notable for being the only international collaboration that includes China. After completing its pilot phase in September 2022, mBridge was commercially launched in September 2023.
The mBridge platform integrates multiple commercial banks from each participating country, focusing on developing the necessary infrastructure and technology. Utilizing a single-platform, direct-access approach, the mBridge Ledger platform enables real-time, peer-to-peer transactions through the HotStuff+ consensus mechanism, facilitating quicker transfers of each country’s national digital currency.
The advancements of mBridge have also caught the attention of the United States Congress. Maxine Waters, the ranking member of the House Financial Services Committee, expressed concerns about the potential misuse of the project for circumventing economic sanctions.
Following the rise of blockchain technology and digital currencies, governments worldwide are exploring the use of blockchain for creating national digital currencies issued by central banks. According to a BIS report, about 90% of central banks globally are considering adopting CBDCs. Currently, 11 countries have launched their CBDCs, 15 are in the pilot phase, and 26 are in the development stage, as per the CBDC tracker from the Atlantic Council think tank.
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