mBridge Digital Currency Project Modernizes China in Global Flow of Money

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The Global reach of China’s digital yuan and other central bank digital currencies has shifted to a new platform. Surprising the defenders of a system long dominated by the US dollar. It has come to be known that The Beijing-backed digital prototype for sending money around the world without relying on US banks is advancing so quickly that some European and American observers now view it as an emerging challenger to dollar-denominated payments in global finance.

Four persons familiar with this initiative that has started said that, the mBridge project, which is being developed by China, Thailand, Hong Kong and the United Arab Emirates, will likely have a basic working product ready by year-end. mBridge is a joint effort with the Switzerland-based Bank for International Settlements (BIS) — a hub of global central-bank collaboration.

The stakes are giant high, the dollar features in an estimated $6.6 trillion worth of foreign-exchange transactions every day, while half of the approximately $32 trillion in global trade each year is invoiced in dollars, according to data from the BIS and the United Nations.

mBridge could eventually make it easier for the Chinese yuan to be used as a dollar alternative by enabling its digital form to settle large corporate transactions. While the platform has been under development publicly since 2017, some American and European officials who monitor it are increasingly worried that it will help give Beijing a head start using digital currencies to revolutionise wholesale payments across borders.

Josh Lipsky, director of the GeoEconomics Centre at the Atlantic Council, a US think-tank, said it has “raised eyebrows” in Washington that mBridge is taking shape at the BIS.

“Taken in isolation it may seem strange because this project raises questions about China’s ambitions to reduce reliance on dollar-based settlement systems,” Lipsky said. “But China, like dozens of other central banks, is working with the BIS because this is where some of the most advanced research in the field is happening.”