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Thai Central Bank Joins Forces with Central Banks in China, Hong Kong, and the UAE for CBDC Trial

The Bank of Thailand (BOT) has teamed up with the Hong Kong Monetary Authority (HKMA), the Central Bank of the United Arab Emirates (CBUAE), and the Digital Currency Institute of the People’s Bank of China (PBC DCI) to test cross-border transfers and exchanges using four different central bank digital currencies (CBDCs). This test marks the first real-world transaction using CBDCs between four countries.

The trial is the second phase of the BOT’s Multiple Central Bank Digital Currency Bridge (mBridge) project, an extension of the Inthanon-LionRock project that began in 2021. The mBridge project was conducted from August 15th to September 23rd, 2022, covering three transaction types: issuance and redemption of CBDCs, cross-border transfer of CBDCs through commercial banks, and cross-border exchange of CBDCs between commercial banks.

Twenty commercial banks from all four countries participated in the mBridge project, including five Thai banks. The trial showed that the mBridge system using CBDCs can improve cross-border transfer efficiency, reducing dependence on correspondent banks, and providing other benefits such as faster transfer times, lower transaction costs, and reduced settlement risks.

The benefits of the mBridge project include reducing cross-border transaction times to just a few seconds (from an average of 3-5 days), lowering transaction costs, and reducing settlement risks. Furthermore, the trial promotes the use of local currencies for cross-border payments.

The use of CBDCs is an innovative way to modernize traditional cross-border payments, and this successful test shows the potential for CBDCs to revolutionize the way we transact globally. This is especially important for countries like Thailand, China, Hong Kong, and the UAE, which have strong trade relationships and high volumes of cross-border transactions.

The BOT has indicated that it will continue to work on the mBridge project with the other central banks, with the goal of developing a more efficient and secure cross-border payment system using CBDCs. The next phase of the project will focus on enhancing the system’s security, scalability, and interoperability.

The success of this trial is a significant step towards the adoption of CBDCs in cross-border transactions. It shows that CBDCs can increase efficiency, reduce costs, and improve security, making cross-border payments more accessible, faster, and cheaper for everyone.

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