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Chinese banks promote involvement in mBridge cross border CBDC

digital yuan currency cbdc RMB china

Multiple Chinese banks announced their involvement in the mBridge cross border central bank digital currency (cross border CBDC) trials after the initiative launched its minimum viable product (MVP) last week. At least nine Chinese institutions are involved in the project, although that figure might now expand with the MVP.

The project uses multiple wholesale CBDCs to make cross border payments faster and cheaper. It’s a joint initiative from the BIS Innovation Hub and the central banks of Thailand, Hong Kong, China and the UAE. Saudi Arabia joined last week.

The Bank of China was the first bank to acknowledge the MVP stage of the project. As part of its statement it confirmed that it was the Chinese bank involved in the very first live transaction between the UAE and China in January. That wasn’t surprising given a cross border CBDC agreement was signed in October involving the Bank of China and First Abu Dhabi Bank (FAB) on the UAE side.

The Agricultural Bank of China said it conducted multiple mBridge trials involving real transactions during early May across 11 Chinese regions.

Both of these big four banks were part of the seven institutions announced as mBridge participants in 2022. The others were the Bank of Communications, China Construction Bank, ICBC, the Postal Savings bank and the China Foreign Exchange Trade System.

A relatively late mBridge joiner in 2023 was Industrial Bank, which also stated it made several live transactions this year, including for goods and services trade payments as well as international interbank transfers.

Each country can choose how to connect to mBridge. In China’s case it has connected its digital RMB system, so incoming and outgoing transfers are funded in that manner.

“As the Currency Bridge enters the minimum viable product (MVP) stage, our bank will continue to fulfill its responsibilities as a digital RMB operating institution, work with partner banks and corporate clients to explore and improve the cross-border financial service solutions of the Currency Bridge, and help promote high-level financial opening-up,” said the person in charge of the Digital RMB Department of Industrial Bank.

mBridge 2022 participants

Image Copyright: liveincosmos / 123rf, BIS