Saudi Arabia joins mbridge (digital currency project)

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Saudi Arabia’s central bank has joined Project mBridge – a cross-border experiment with central bank digital currencies (CBDCs) for international trade – as a full participant, the Switzerland-based Bank for International Settlements (BIS) announced on Wednesday. This move underscores Saudi Arabia’s commitment to exploring the potential of digital currencies in enhancing global financial transactions.

What is Project mBridge?

Project mBridge was launched in 2021 as a collaboration between the BIS’ innovation arm and the central banks of China, Hong Kong, Thailand, and the United Arab Emirates (UAE). The project’s goal is to test the viability of CBDCs for instantaneous cross-border trade and other payments using the project’s blockchain, the mBridge Ledger. By leveraging digital currencies, mBridge aims to streamline and secure international financial transactions.

Recent Developments in Project mBridge

The BIS announced on Wednesday that Project mBridge has reached the minimum viable product (MVP) stage after three years of development. This milestone signifies that the platform is ready for real-world testing and application. BIS has also invited private sector financial firms to propose new solutions and use cases that help develop the platform and showcase all its potential.

Participants and Observers

In addition to the six full participants in mBridge, 27 other official entities – including the International Monetary Fund (IMF), the World Bank, and different central banks of countries such as Norway, South Korea, and Turkey – have signed on as observers. These observers have access to a “sandbox” for experimentation with the technology, allowing them to explore the capabilities and benefits of digital currencies within a controlled environment.

Major Financial Institutions Involved

Global financial institutions, including Goldman Sachs, HSBC, and China’s six biggest state-owned banks, are actively involved in Project mBridge. Their participation underscores the significant interest and potential that leading financial players see in digital currencies and blockchain technology for enhancing global trade and financial systems.

FAQs

What is Project mBridge?

Project mBridge is a collaborative initiative involving the BIS and several central banks to test out the usuage of central bank digital currencies (CBDCs) for instantaneous cross-border trade and payments using the mBridge Ledger blockchain.

Why has Saudi Arabia joined Project mBridge?

Saudi Arabia has joined Project mBridge to explore the potential of digital currencies in enhancing international financial transactions and to participate in developing innovative financial technologies.

What are central bank digital currencies (CBDCs)?

CBDCs are digital forms of a country’s sovereign currency screened and governed by the central bank. 

What is the mBridge Ledger?

The mBridge Ledger is the blockchain platform used in Project mBridge to facilitate and test cross-border transactions using CBDCs.

Who are the main participants in Project mBridge?

The main participants include the central banks of China, Hong Kong, Thailand, the UAE, and now Saudi Arabia. Additionally, 27 official entities, including the IMF and the World Bank, act as observers.

What is the minimum viable product (MVP) stage in Project mBridge?

The MVP stage indicates that Project mBridge has developed a basic, functional platform version ready for real-world testing and application.

How are private sector financial firms involved in Project mBridge?

Private sector financial firms are invited to propose new solutions and use cases that help develop the mBridge platform and demonstrate its full potential in enhancing global financial transactions.

Takeaway

With Saudi Arabia’s participation, Project mBridge continues to expand its reach and impact, exploring the potential of digital currencies in the global financial system. The collaboration among central banks, financial institutions, and international organizations aims to create a more efficient and secure framework for international trade and payments.

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