China Central Bankers say joint mBridge project requires mutual trust

Deputy Governor of the People’s Bank of China said countries working together to build mBridge need to build trust and have a mutual understanding of each other’s regulatory framework.

Lu Lei, vice governor of the People’s Bank of China, said that countries working together on the development of the central bank digital currency platform mBridge should respect each other’s monetary regulations if they want crossover, according to SCMP’s Oct. 23 report. Limit payment tool to be successful.

“It’s a balance between the rights and responsibilities of participating jurisdictions while preventing disruptions in international monetary and financial systems,” Lu Lei said at Sibos Beijing on October 23.

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

The project, which was first introduced in 2021, was expected to officially start in 2024.

Lu stated that mBridge should be able to reduce the barriers encountered after cross-border payments and not create new ones. It should also be able to reduce existing market fragmentation.

“We need to reduce existing cross-border payment costs while avoiding additional geopolitical and compliance costs,” Lu added.

He said mBridge serves to provide services and solve problems that banks cannot solve, such as cross-border e-commerce payments and remittances.

Lu hopes the cross-border CDBC project can strengthen cooperation within Asean and the Belt and Road Initiative due to “close trade ties and relatively stable geopolitical conditions.”

As for what mBridge could mean for the dominance of the US dollar, Zhou Xiaochuan, former governor of the PBOC, said it was “largely up to the US government itself”.

“The relationship between mBridge and the US dollar or other currencies depends not only on technological development, but also on the policy itself in Western countries,” Zhou said.

In November 2023, a Chinese official announced that mBridge had completed its testing phase.