The United Arab Emirates and China have executed their first cross-border central bank digital currency (CBDC) transaction valued at $13.6 million using digital dirham and digital yuan.
According to People.cn, the 50-million-dirham ($13.6 million) transaction occurred via the m-CBDC Bridge platform during the Central Bank of UAE’s 50th anniversary celebration in Abu Dhabi. This payment introduced the use of digital currencies in multilateral financial exchanges.
The event was attended by nearly a thousand people and marked by the presence of officials from both nations, including Vice President and Deputy Prime Minister of the UAE Mansour bin Zayed Al Nahyan and the Chinese Ambassador to the UAE Zhang Yiming.
During the celebration, Mansour invited Zhang to jointly initiate the cross-border payment and launch the m-CBDC Bridge, making the first real-time transaction since the Bridge’s phase one pilot in 2022.
Meanwhile, the Bank of China’s UAE institution also utilized the platform to successfully complete the first digital yuan cross-border remittance transaction.
Project mBridge for Multi-CBDC Cross-Border Transactions
Project mBridge is a multi-national digital currency platform initiated by the Bank for International Settlements. The founding central banks include Hong Kong Monetary Authority, Central Bank of the United Arab Emirates, Digital Currency Institute of the People’s Bank of China and Bank of Thailand.
The introduction of multi-CBDC (Central Bank Digital Currency) arrangements aimed to revolutionize the existing framework for cross-border transactions. The mBridge platform, underpinned by the mBridge Ledger, was particularly geared towards enhancing the efficiency of international trades.
Digital Yuan Remittances Set for Expansion in Hong Kong
A recent report by Xinhua unveiled that a collaboration between the Digital Currency Research Institute of the People’s Bank of China and the Hong Kong Monetary Authority is set to enhance the digital yuan’s cross-border capabilities, focusing on small-scale remittances between Mainland China and Hong Kong.
Initiated in late 2020, the pilot has facilitated digital yuan exchanges and payments across the regions. With preparations nearly complete, the next phase will see more institutions in Hong Kong offering these services.
Key developments include simplifying the process for Hong Kong residents to use digital yuan wallets and introducing cross-border remittances to improve transaction efficiency.
Additionally, efforts are underway to integrate digital yuan with Hong Kong’s payment systems, aiming to expand merchant acceptance and streamline cross-border e-commerce and educational payments.