March 27, 2024
UAE Initiates First Digital Dirham Transfer Using mBridge CBDC Platform
Policy & Regulation

UAE Initiates First Digital Dirham Transfer Using mBridge CBDC Platform

In a landmark development heralding a new era in digital currency transactions, the central bank of the United Arab Emirates (UAE) executed its inaugural cross-border digital dirham transfer using the mBridge central bank digital currency (CBDC) platform on January 29.

According to reports from Gulf News, the momentous transaction, totalling 50 million dirhams ($13.6 million), was routed to China via the multi-CBDC mBridge platform. The transfer was personally conducted by Sheikh Mansour, the chairman of the board of the Central Bank of the UAE, to mark the golden jubilee celebration of the establishment of the central bank.

The mBridge initiative, introduced in 2021 by the central monetary authorities of China, Hong Kong, Thailand, and the UAE in collaboration with the Bank for International Settlement (BIS), is a pioneering international collaborative effort involving China. Following its first pilot in September 2022, the project has made significant strides in facilitating cross-border CBDC transactions.

Key to the success of the mBridge platform is its integration of multiple commercial banks from each participating member nation, collectively working to bolster the infrastructure and technology necessary for seamless CBDC transfers. Powered by the innovative HotStuff+ consensus mechanism, the mBridge ledger platform enables real-time, peer-to-peer transactions with enhanced efficiency, paving the way for swift and secure cross-border transfers of national digital currencies.

While mBridge’s advancements have garnered international recognition and acclaim, concerns have been raised regarding its potential misuse. Representative Maxine Waters, a House Financial Services Committee member, expressed apprehensions about the project’s susceptibility to exploitation as a means of circumventing economic penalties.

The successful implementation of the UAE’s cross-border CBDC transfer underscores the growing global momentum towards adopting blockchain technology and issuing national digital currencies by central banks. According to a report by the Bank for International Settlement (BIS), nearly 90% of central banks worldwide are actively exploring the potential of CBDCs, with 11 countries having already launched CBDCs, 15 in the pilot stage, and 26 in the development phase, according to data from the CBDC tracker maintained by the Atlantic Council.

As governments worldwide continue to embrace blockchain technology and digital currencies, initiatives like mBridge are poised to play a pivotal role in shaping the future of cross-border financial transactions and fostering greater financial inclusion on a global scale.

Image: Wallpapers.com

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