In a recent address at Sibos Beijing, Lu Lei, Deputy Governor of the People’s Bank of China, emphasised the necessity of mutual trust and understanding among the countries involved in the mBridge project. He highlighted that to ensure the success of this central bank digital currency (CBDC) platform, participating nations must respect each other’s regulatory frameworks. This collaboration involves the central banks of Hong Kong, Thailand, the United Arab Emirates, and China.

Establishing a Balanced Framework

Lu stressed the importance of finding a balance between the rights and responsibilities of each jurisdiction. “We must prevent disruptions to the international monetary and financial systems,” he remarked. The mBridge initiative aims to simplify cross-border payments rather than complicate them, reducing barriers and fostering financial integration.

Focus on Cross-Border Payment Solutions

The mBridge project, first introduced in 2021, is built on a proprietary blockchain designed specifically for this initiative. Lu outlined its potential to resolve issues that traditional banks struggle with, such as cross-border e-commerce payments and remittances. By streamlining these processes, mBridge aspires to diminish existing market fragmentation and mitigate geopolitical and compliance costs associated with cross-border transactions.

Future Implications for Global Currency Dynamics

Addressing concerns about the mBridge’s impact on the US dollar’s dominance, former PBOC Governor Zhou Xiaochuan remarked that the project’s relationship with the dollar and other currencies hinges on the policies of Western governments as much as on technological advancements. As mBridge prepares for its official launch in 2024, Zhou noted that the future of this digital currency will be shaped by broader geopolitical and economic factors.