Page 30 - Banking Finance June 2025

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be made involving forex conversion, so cross border payments common single platform with single standard or rules, pro-
in same currency or a third currency is not possible. tocols, and architecture, it overcomes the interoperability
issue and starts with a clean slate where all the Central
It is a promising project and in its next live implementation Banks can issue and exchange their CBDCs. The platform is
phase, India along with several other Asian countries are designed to connect different jurisdictions in a common
going to join Nexus making it a worthy solution to watch technical infrastructure.
out for.
The platform also enables smart contracts execution and
Central Bank Digital Currency (CBDC) enables straight through processing and atomic settlements.
Atomic settlement means there is no distinction between
Central Bank Digital Currency or CBDC is the digital money
issued by the Central Bank. It is the digital version of a the money and message and all parts of the transaction
either happen together or do not happen at all. Take the
country's fiat currency. CBDC can be of two broad types viz.,
Retail and Wholesale CBDCs. Retail CBDC can be used by example of modern correspondent Baking where message
individuals to make payments to businesses or other indi- travels by SWIFT and money travels through chains of cor-
viduals. Whereas wholesale CBDCs can be used by institu- respondent banks and both travel at different time and
tions to make payments to other institutions. As per 2023 speeds, thereby resulting in both reaching the recipient
BIS survey on central bank digital currencies (CBDCs) and separately and at different times. In mBridge ledger the
transaction happens in form of digital currency or CBDC and
crypto, 94% of the Central Banks are working on CBDC and
there is no need for a separate message by SWIFT or any
almost 31% were in pilot stage. Interestingly, the survey
suggests that the Central Banks are exploring wholesale other similar intermediary. Project mBridge has reached the
minimum viable product or MVP stage in June 2024 thereby
CBDC for enhancing cross border payments and 24% are
taking it forward from prototype stage and closer to pro-
considering foreign exchange transactions as a potential use
duction ready stage.
case for Wholesale CBDC.
The platform design aims to ensure that mBridge adheres
G-20 Roadmap has also identified CBDC as a potential means
to improve cross border payments. CBDC are expected to to the five main CBDC principles as enunciated in G-20
potentially make immediate, cheap, and universally acces- Roadmap viz., do no harm, enhancing efficiency, improving
sible cross border payments a reality. The most promising resilience, assuring coexistence and interoperability with
non-CBDC systems, and enhancing financial inclusion.
CBDC based solution for cross border payments is a multi-
CBDC platform on which multiple Central Banks can issue
and exchange their national CBDCs with other countries. The project mBridge is at the cutting edge of innovation in
international payments and may well prove to be the pro-
Project Dunbar by BIS Innovation Hub was the first of its
verbial holy grail of cross border payments.
kind project that focused on building a common multi CBDC
platform and also understanding challenges involved in it.

Project mBridge is a wholesale multi CBDC project by BIS
Innovation Hub Hongkong along with the Bank of Thailand,
the Central Bank of the United Arab Emirates, the Digital
Currency Institute of the People's Bank of China, and the
Hong Kong Monetary Authority. It has over 31 observer
members including Reserve Bank of India, Federal Reserve
Bank of New York, IMF, World Bank etc.

Multi CBDC platform mBridge is based on Blockchain and
distributed ledger technology. It has its own custom built
blockchain mBridge ledger which has been developed by
Central Banks for Central Banks. It allows real time, peer to
peer foreign exchange and cross border payments. Being a

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