What’s new: The digital currency research institute of the People’s Bank of China (PBOC) has joined an international research project for cross-border payments using central bank digital currencies (CBDCs), according to a Tuesday announcement by the Hong Kong Monetary Authority (HKMA), which jointly initiated the program with the Bank of Thailand in 2019.
The project, renamed “m-CBDC Bridge” and currently in its second phase, aims to facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context, and explore business use cases in a cross-border context using both domestic and foreign currencies.
The HKMA, Hong Kong’s de facto central bank, expects the project’s findings to solve problems associated with cross-border fund transfers including inefficiencies, high costs and complex regulatory compliance.
The background: In January 2020, the HKMA said that a proof-of-concept prototype had been developed successfully together with 10 banks from Hong Kong and Thailand.
The PBOC’s participation may be a sign that the central bank is speeding up the cross-border payment application of its own digital currency, as the Chinese mainland’s focus in developing the digital currency has so far been on domestic use by consumers for retail payments.
Along with the PBOC, the Central Bank of the United Arab Emirates has joined the second phase of the project, according to the HKMA.
Related: Zhou Xiaochuan: China’s Choices in Developing Its Digital Currency System
Contact reporter Luo Meihan (meihanluo@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)
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