The Central Bank of the Emirates, in cooperation with the Innovation Center of the Bank for International Settlements in Hong Kong, the Hong Kong Monetary Authority, the Bank of Thailand, and the Institute of Digital Currency of the People’s Bank of China, issued the first report of the “Multiple Digital Currency Bridge for Central Banks” project, which is an achievement in The International Trade Payments Project is an advanced step towards facilitating cross-border commercial payments and making them more secure and timely.
The “Bridge” project uses multiple central bank digital currencies to transfer funds internationally between participating banks, based on distributed ledger technology, also known as “blockchain”. Since February 2021, the Central Bank has worked in cooperation with its central bank partners around the world, to complete this proof-of-concept work, which has resulted in a more efficient and innovative digital currency infrastructure, in order to mitigate the challenges facing cross-border payments, including high costs. , lack of transparency, low efficiency, and other operational complexities.
Reduce transaction costs
Preliminary findings of the report show a significant improvement in the speed of cross-border money transfer from several days to seconds around the clock, in addition to the potential to significantly reduce correspondent banking transaction costs for users, while improving the interoperability of banking systems, and ensuring regulatory compliance.
The UAE Central Bank began the journey of developing international payment channels in 2019, when it successfully completed the “Aber” project, another proof of concept of digital currencies for central banks, in partnership with the Central Bank of Saudi Arabia. The link between the UAE dirham and the Saudi riyal to the US dollar has enabled the digital currency shared in the “Aber” project not to be subject to any changes in exchange rates, making it a quick and effective solution to complete cross-border payment transactions.
Khalid Mohammed Balama, Governor of the Central Bank of the UAE, said: “The Central Bank plays a pioneering and proactive role in facilitating money transfers at the regional and international levels, by developing more effective, efficient and flexible infrastructure for cross-border payments with our partners, to promote global economic development.”
He added, “The Central Bank looks forward to benefiting from the experience gained with our Asian central bank partners in the matter of central bank digital currencies, with the aim of facilitating increased international trade and speeding up payments.”