The Bank for International Settlements (BIS) has revealed an update to Project mBridge, a prototype platform for cross-border payments with central bank digital currencies (CBDC). The paper announces the imminent launch of an MVP for commercial use based on current developments.
The BIS Innovation Hub analysts presented an informational brochure on the update of the international CBDC pilot project — Project mBridge.
The document reveals the following details of Project mBridge:
- A clear governance structure, previously available only as scattered parts, is described.
- A consensus algorithm, Dashing based on Byzantine Fault Tolerance (BFT), is defined that uses proofs of partial confirmation of a block validation to accelerate agreement and improve overall protocol performance.
- Information is provided on the project’s use of legal entity identifiers for anti-money laundering and countering the financing of terrorism.
- Information on the platform’s capabilities within the framework of international payments optimization is disclosed.
- The list of observer organizations and direct participants of the project is updated.
The document contains a lot of illustrations explaining the governance structure, the technical details of which are described in the most straightforward manner. This approach to presenting information about the project clearly demonstrates the BIS’ intentions to bring the product to the market soon. The document emphasizes that the next stage in Project mBridge’s development is the launch of an MVP to test the ability of the CBDC platform to process cross-border payments on a commercial basis.
In particular, the next phase of the Project mBridge pilot is planned to:
- Improve the platform’s functionality.
- Work on a legal and governance framework focused on the global standards of the Committee on Payments and Market Infrastructures (CPMI) and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance.
- Explore new technology solutions to support foreign exchange operations and liquidity.
- Establish a platform for testing and evaluating potential interoperability with other BIS projects and private sector solutions.
- Attract new participants and international observers.
- Expand the options for using the platform and its scope of application.
Project mBridge was launched by the BIS in 2021 with the participation of the authorities of China, Hong Kong, Thailand, and the UAE. In September 2022, the project successfully processed transactions worth $22 million. In September this year, plans for the platform’s commercial launch for cross-border payments were announced.
