UAE Central Bank Pioneers Digital Dirham Transfer to China via mBridge
Jessie A Ellis Jan 31, 2024 04:32
The UAE Central Bank achieved a significant milestone by executing its first cross-border digital dirham transfer worth 50 million dirhams ($13.6 million) to China using the mBridge platform on January 29, marking a new era in digital currency transactions.
On January 29, the Central Bank of the United Arab Emirates (UAE) made a groundbreaking move in the realm of digital currencies by conducting its first cross-border digital dirham transfer. This transfer, amounting to 50 million dirhams (equivalent to $13.6 million), was sent to China utilizing the mBridge central bank digital currency (CBDC) platform.
The transfer was overseen by Sheikh Mansour, the chairman of the board of the Central Bank of the UAE, during the golden jubilee celebration of the bank's establishment. This event is not just a significant milestone for the UAE but also a remarkable step in the global advancement of digital currencies.
The mBridge platform, introduced in 2021, is a collaborative effort between the central monetary authorities of China, Hong Kong, Thailand, and the UAE, in partnership with the Bank for International Settlement (BIS). It stands out as the only international collaborative partnership that includes China. The first pilot of Project mBridge was completed in September 2022, and since then, it has onboarded multiple commercial banks from each participating nation to develop its infrastructure and technology.
mBridge utilizes a single-platform, direct-access architecture, employing the HotStuff+ consensus mechanism to facilitate real-time, peer-to-peer transactions. This innovative approach allows for faster transfers of each participant country’s national digital currency, showcasing the potential of CBDCs in streamlining cross-border payments.
The use of blockchain and distributed ledger technology for digital currencies has gained significant interest worldwide. According to a BIS report, nearly 90% of central banks globally are exploring the adoption of CBDCs. Among these, 11 countries have already launched a CBDC, 15 are in the pilot stage, and 26 are in the development phase. This trend indicates a growing acknowledgment of the potential benefits and efficiencies that CBDCs can bring to the global financial system.
The success of the UAE's digital dirham transfer via mBridge highlights the increasing integration of blockchain technology in national and international finance, potentially reshaping the future of money transfer and economic transactions globally.
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