A Chinese official has disclosed specifics about their blockchain mechanism for the “Currency Bridge,” which facilitates seamless cross-border transactions and concurrent foreign exchange settlements.
At the FinTech Symposium, held as part of Hong Kong’s Science and Technology Week, Mu Changchun, the head of the Digital Currency Institute at the People’s Bank of China, presented updates on the technical structure and privacy strategies of their central bank digital currency (CBDC) initiative, referred to as the ‘Money Bridge.’
This ‘Money Bridge’ initiative will operate on a custom-built blockchain known as the mBridge Ledger (mBL), designed specifically for the project. The mBL will provide key features like concurrent settlement of payments and foreign exchange, management of digital wallets, and privacy protection.
The mBridge project’s pilot phase commenced with a collaboration that began in February 2021, involving the Digital Currency Institute and various central banks, including those of Hong Kong, Thailand, and the United Arab Emirates, under the supervision of the Innovation Hub.
During August and September 2022, a successful pilot trial was conducted with eight commercial banks from the participating nations, marking the first real-world use of the Money Bridge platform. This trial included nine cross-border and foreign exchange transactions totaling over one million yuan, with the digital yuan accounting for 5.46% of the conducted operations, primarily focused on cross-border trade and interbank transactions.
Mu Changchun highlighted the transparency of the mBridge system, noting that its source code is open for full inspection, verification, and auditing by all participating central banks and monetary authorities. With these sophisticated technical and privacy provisions, the Money Bridge project seeks to set a new standard for secure and efficient digital currency operations internationally, showcasing the potential and the prospective role of CBDCs in the world’s financial architecture.