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The Deputy Governor of China’s Central Bank emphasizes the importance of trust and mutual understanding among countries partnering to develop mBridge, a cross-border central bank digital currency (CBDC) platform.
Importance of Regulatory Harmony
On October 23, Lu Lei, the Deputy Governor of the People’s Bank of China, stressed that countries collaborating on mBridge must respect each other’s monetary regulations to ensure the success of this cross-border payment tool. Speaking at Sibos Beijing, Lu Lei stated,
“A balance between the rights and responsibilities of participating jurisdictions, while preventing disruptions to the international monetary and financial systems.”
Overview of the mBridge Project
The mBridge project, also known as the Money Bridge project, is a cross-border CBDC initiative developed on a proprietary blockchain. This collaboration involves the central banks of Hong Kong, Thailand, the United Arab Emirates, and China. The Hong Kong Monetary Authority is also a key participant in this project. Initially introduced in 2021, mBridge is anticipated to officially launch in 2024.
Project Goals and Challenges
Lu Lei highlighted that mBridge aims to reduce barriers in cross-border payments rather than create new ones. The project seeks to decrease existing market fragmentations and avoid introducing additional geopolitical and compliance costs while lowering cross-border payment expenses.
“We must also avoid introducing additional geopolitical and compliance costs while reducing existing cross-border payment costs,”
added Lu Lei.
He further explained that mBridge is designed to address issues that traditional banks struggle with, such as cross-border e-commerce payments and remittances.
Strengthening Regional Collaborations
Lu Lei hopes that mBridge will bolster collaborations within the ASEAN region and the Belt and Road Initiative, citing close trade ties and relatively stable geopolitical conditions as supportive factors.
Impact on the US Dollar
Regarding the potential impact of mBridge on the dominance of the US dollar, former Governor of the People’s Bank of China, Zhou Xiaochuan, noted that this largely depends on the policies of the US government.
“The relationship between mBridge and the US dollar, or other currencies, is not only dependent on technological development but also the policy itself in the Western countries.”
said Zhou Xiaochuan.
Completion of Testing Phase
In November 2023, a Chinese official announced that mBridge has successfully completed its testing phase, moving one step closer to its anticipated 2024 launch.
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