The UAE Central Bank successfully performed a cross-border digital Dirham transfer using the mBridge CBDC platform.
The UAE Central Bank Successfully Conducted First Cross-Border Digital Dirham Transfer Using mBridge CBDC Platform on January 29th📅 Last updated: January 29, 2024 22:43 EST | ⌛ Read time: 2 min
Source: Dalle-3
The Central Bank of the United Arab Emirates (UAE) achieved a significant milestone by conducting its inaugural cross-border digital dirham transfer using the mBridge central bank digital currency (CBDC) platform on January 29. The transaction involved the transfer of 50 million digital dirhams (equivalent to $13.6 million) to China. It was executed by Sheikh Mansour, the Chairman of the Board of the Central Bank of the UAE. The transfer marked a historic celebration of the central bank’s 50th anniversary.
mBridge Facilitates Landmark Cross-Border Digital Dirham CBDC Transfer to China
The ceremony highlighted the progress and development journey of the CBUAE over 50 years. It emphasized its role in strengthening financial and monetary stability, fostering economic growth, and contributing to the digital transformation of the financial services sector.
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Project mBridge utilizes a single-platform, direct-access infrastructure for real-time, peer-to-peer transactions. The platform employs the HotStuff+ consensus mechanism. mBridge involves multiple commercial banks from each participating country, contributing to infrastructure and technology development. In return, the ledger platform facilitates faster transfers of each participating country’s national digital currency.
Source: mBridge
The mBridge platform, initiated in 2021 through collaboration between the central monetary authorities of China, Hong Kong, Thailand, and the UAE in partnership with the Bank for International Settlements (BIS), enables multi-central bank digital currency transactions. It completed its pilot phase in September 2022 and was commercially launched in September 2023.
As governments worldwide explore the integration of blockchain technology for national digital currencies, the mBridge project exemplifies the growing trend. According to a report by the Bank for International Settlements (BIS), nearly 90% of central banks globally are considering the adoption of CBDCs. Of these, 11 countries have already launched CBDCs, 15 are in the pilot stage, and 26 are in the development phase, as indicated by the CBDC tracker from the Atlantic Council.
While mBridge’s advancements have drawn positive attention, concerns have been raised, notably by Representative Maxine Waters of the House Financial Services Committee in the United States. Waters expressed worries about the potential misuse of the project as a cover for avoiding economic penalties, shedding light on the complex intersection of financial technology, geopolitics, and international relations.
CBUAE’s Commitment to Financial Transformation
During the event, Sheikh Mansour also witnessed the graduation of the first batch of 1,056 male and female citizens from the “Ethraa” program. The program aims to enhance Emirati representation in the financial sector by equipping citizens with advanced skills and qualifications through training at the Emirates Institute of Finance.
As part of the Financial Infrastructure Transformation Programme (FIT), the CBUAE has launched innovative projects to accelerate digital transformation in the financial sector, aligning with its strategy to position itself among the top central banks globally.
Sheikh Mansour reiterated the leadership’s commitment to empowering UAE national cadres, stating that qualified professionals with diverse skills and knowledge would strengthen the financial sector and contribute to the nation’s progress.
The event also featured the “Aani” instant payment platform, launched by Al Etihad Payments in October 2023, and the introduction of “Open Finance,” enabling consumers to connect and share data across the entire financial ecosystem. Additionally, the visual identity of the Ombudsman Unit, named “Sanadak” (Arabic for “Your Support”), was launched during the ceremony. Sanadak is the first independent unit for settling banking and insurance disputes in the Middle East and North Africa.
Future Outlook and Investment Recommendations
Based on the increasing global interest in CBDCs, the mBridge project serves as a pivotal example of how blockchain technology is revolutionizing the financial sector. As more central banks explore CBDC adoption, the potential for international collaboration and streamlined cross-border transactions becomes even more significant.
Investors should carefully monitor the developments surrounding CBDCs and the mBridge project. The integration of CBDCs could bring about new investment opportunities, particularly in blockchain-related technologies and infrastructure. Additionally, understanding the geopolitical landscape and potential regulatory challenges will be crucial for making informed investment decisions.
🔍 References 1. CBUAE 2. Bank for International Settlements (BIS) 3. mBridge 4. Bank for International Settlements Report 5. CBDC Tracker from the Atlantic Council
Q&A Content:
Q: What is the significance of the Central Bank of the UAE completing the cross-border digital dirham transfer? A: The completion of the cross-border digital dirham transfer signifies the UAE’s commitment to advancing financial and monetary stability while embracing digital transformation. It demonstrates the potential for central bank digital currencies (CBDCs) to streamline cross-border transactions and enhance economic growth.
Q: How does the mBridge platform facilitate the transfer of digital currencies? A: The mBridge platform provides a direct-access infrastructure for real-time, peer-to-peer transactions. It utilizes the HotStuff+ consensus mechanism, enabling multiple commercial banks from each participating country to contribute to infrastructure and technology development. This collaboration ensures faster transfers of each participating country’s national digital currency.
Q: What is the current global status of CBDC adoption? A: According to the Bank for International Settlements (BIS) report and the CBDC tracker from the Atlantic Council, nearly 90% of central banks globally are considering the adoption of CBDCs. Eleven countries have already launched CBDCs, while 15 are in the pilot stage and 26 are in the development phase.
Q: What concerns have been raised regarding the mBridge project? A: Representative Maxine Waters has expressed concerns about the potential misuse of the mBridge project as a cover for avoiding economic penalties. This highlights the complex intersection of financial technology, geopolitics, and international relations that arises with the integration of CBDCs.
At the forefront of innovation, the Central Bank of the UAE continues to forge new paths in the financial sector. The successful cross-border digital dirham transfer and the mBridge platform’s advancements showcase the transformative power of blockchain technology. As the world embraces central bank digital currencies, the future holds exciting opportunities for investors and the evolution of global financial systems.
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