BIS releases full report on mBridge wholesale CBDC platform after successful pilot

The Bank for International Settlements is on track with its third publication in days detailing how commercial banks in four jurisdictions moved funds using CBDCs.

The Bank for International Settlements (BIS) has released full details of its mBridge pilot project to use Central Bank Digital Currencies (CBDCs) for currencies. Commercial banks in four jurisdictions made cross-border transfers using CBDC and distributed ledger technology (blockchain) under the project, which was hailed as a success.

Twenty commercial banks in Hong Kong, China, UAE and Thailand have used the custom mBridge Ledger platform and CBDCs issued by their respective central banks to conduct payment and PvP foreign exchange transactions on behalf of their between August 15 and September 23. Over $12 million has been issued on the platform, facilitating over 160 transactions worth over $22 million.

The mBridge Ledger platform used a single-platform, direct-access infrastructure to perform real-time, peer-to-peer transactions with the HotStuff+ consensus mechanism. The Dashing dynamic threshold consensus protocol is also being tested.

The project highlighted a number of policy challenges. According to the authors of the project document, the legal categorization of a CBDC is the most pressing issue. They wrote:

"The typical question is whether the CBDC on the platform would be classified as a currency, a representation of funds on account with the central bank, a debt, or something else."

The new technology has raised even more fundamental questions than this, the authors continue:

"Extending access to central bank money directly to foreign participants and transacting on a shared ledger requires further exploration of policy, data privacy, and governance considerations."< /p>

Practical issues to be addressed in 2023 and 2024 include liquidity management integration and currency price discovery.

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