China Central Bankers say joint mBridge project requires mutual trust

Deputy Governor of China’s Central Bank says the countries partnering together to build mBridge would need to establish trust and mutual understanding of one another’s regulatory framework.

According to a report by SCMP on Oct. 23, the deputy governor of the People’s Bank of China Lu Lei said that countries working together in developing the central bank digital currency platform mBridge will need to respect each other’s monetary regulations if they want their cross-border payment tool to be successful.

“A balance between the rights and responsibilities of participating jurisdictions, while preventing disruptions to the international monetary and financial systems,” said Lu Lei at Sibos Beijing on Oct. 23.

The Money Bridge project, also known as mBridge, is a cross-border CDBC project build on a on a proprietary blockchain developed exclusively for this initiative. The collaboration involves the central banks of Hong Kong, Thailand, United Arab Emirates and China. The Hong Kong Monetary Authority is also involved in the CDBC project.

First introduced in 2021, the project was expected to launch officially in 2024.

Lu stated that mBridge must be able to reduce barriers faced in the wake of cross-border payments, not create new ones. Furthermore, it should be able to decrease existing market fragmentations.

“We must also avoid introducing additional geopolitical and compliance costs while reducing existing cross-border payment costs,” added Lu.

He said that mBridge serves to provide services and resolve problems that banks are unequipped to handle, namely cross-border e-commerce payments and remittance.

Lu hopes that the cross-border CDBC project will be able to strengthen collaborations within the Asean and Belt and Road Initiative due to “close trade ties and relatively stable geopolitical conditions.”

Regarding what mBridge might mean for the domination of the US dollar, former governor of the PBOC Zhou Xiaochuan said that is “very much up to the US government itself.”

“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.

In Nov. 2023, a Chinese official revealed that mBridge has completed the testing phase.